And then there were two [U.S. carmakers] ...
November 11, 1998
70 Years of Chrysler Coming to End
DETROIT (AP) -- Seven often-tumultuous decades as the
scrappy survivor among the Big Three automakers end for
Chrysler Corp. on Thursday when its merger with
Germany's Daimler-Benz AG becomes official.
Seventy-three years after former General Motors Corp.
executive Walter P. Chrysler renamed the Maxwell Motor
Car Co. after himself, Chrysler Corp. retires into the
history books. The Big Three become the Big Two, and a
new era begins for the Motor City.
But little will change immediately for most employees
of the new DaimlerChrysler AG. The closing of the $37
billion stock deal will be little more than a legality
until Tuesday, which executives have designated as
''Day One'' of the new company.
On that day, the Chrysler signs in front of the
company's modern, granite-faced headquarters outside
Detroit will be changed to DaimlerChrysler, while
employees on both sides of the Atlantic start using
DaimlerChrysler stationery and business cards. The new
company's stock will begin trading on the New York and
Frankfurt exchanges and an international advertising
campaign will introduce the new company to the world's
consumers.
The merger is among the largest in industrial history
and a major step in the continued globalization of the
industry. It puts Chrysler and Daimler on a more
competitive footing with the four global automakers
that will rank ahead of it: GM, Ford Motor Co., Toyota
Motor Corp. and Volkswagen AG.
Most of the hard work to make the merger a success
remains. On day one, only the companies' finance and
procurement operations will be fully merged. Chrysler
and Daimler will continue to operate, in many ways, as
separate companies.
''We have the luxury of a little bit of time to work on
blending organizations,'' Chrysler President Thomas T.
Stallkamp said recently. ''Not everything will be
integrated on day one. The rest of it will come as we
believe it's prudent.''
Thursday's closure of the deal also closes the books on
Chrysler as an American corporation. DaimlerChrysler
will be incorporated in Germany.
Chrysler was incorporated on June 6, 1925, as the
successor to Maxwell. During the Depression, Chrysler's
sales were increasing while its major competitors lost
ground. By 1935, it had replaced Ford as No. 2 in sales
behind GM -- a spot it maintained until 1950.
The company was known in its early years for several
innovations, including rubber engine mounts in 1932,
the overdrive transmission in 1934 and the
ahead-of-its-time Chrysler and DeSoto Airflow cars with
their radically aerodynamic styling.
As the industry consolidated and nameplates such as
Hudson, Kaiser and Studebaker disappeared, Chrysler
held on to its No. 3 position in the shadow of the much
bigger GM and Ford.
Chrysler earned a reputation for high-performance
engineering in the '50s and '60s; its 426 Hemi V8
engine was legendary during the muscle-car era. But by
the mid-1970s, Chrysler's sales were falling as
Americans turned to smaller, fuel-efficient cars from
Japan.
Lee A. Iacocca, a former Ford executive, was hired to
run Chrysler and helped persuade the federal government
in 1979 to guarantee $1.5 billion worth of loans to
keep the automaker afloat. Concessions from workers and
creditors, staff cuts and the creation of the K-car
line also helped save Chrysler.
Iacocca became the first auto executive since Henry
Ford to become an American folk hero. His autobiography
became a bestseller, he appeared in Chrysler
commercials and was promoted as a potential
presidential candidate.
In the early 1980s, Chrysler's minivans were a huge
success, creating a new market segment that all but
killed off the station wagon. But as Iacocca invested
profits in new businesses, including aerospace and
electronics, the company's K-car-based car line grew
stale. By the early 1990s, Chrysler was again posting
losses and was in serious trouble.
One big purchase that turned out to be a winner was
Iacocca's 1987 buyout of struggling American Motors
Corp., which gave what turned out to be a huge asset --
the Jeep brand -- just as demand for sport utility
vehicles was about to take off.
Before Iacocca stepped down in 1993, Chrysler began
adopting and modifying Honda's team approach to
creating new models. A series of hits, including the
Jeep Grand Cherokee SUV, a new line of full-size
sedans, the Dodge Ram pickup and a new generation of
minivans -- helped put Chrysler back in the black and
make it one of the world's most profitable automakers
by the mid-90s.
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