Index

1. History of Chrysler Corporation

2. History of Daimler-Benz Corporation

3. Short Summery of Current Position of DaimlerChrysler

4. Reasons for Merger and New Opportunities

5. Opportunities in New Markets

6. Decrease in Price of Materials Bought from Suppliers

7. Decrease in R&D Expenses per Production Unit

8. Confluence of Technologies of Both Corporations

9. Double Strength of the New Corporation
10. Market Concerns
11. New Corporation
12. Achievements of the New Corporation
13. Survey of Recent Stock Performance
14. Comments on some of Financial Ratios of the New Corporation
15. Government Concerned that…
16. Environmental Issues in the New Corporation
17. Conclusion

History of Chrysler Corporation

It would be true to say that Chrysler Corporation was born long ago before the year 1925 (when it was officially established). It was started as a result of Walter P. Chrysler’s efforts to create a car that would be affordable and competitive in the market. The first car would incorporate four-wheel hydraulic brakes and a high-compression six-cylinder engine.

In 1924, New York for the first time saw a car that became the ancestor of all generations of Chrysler’s cars. It was the Chrysler Six.
The car was not allowed to be presented at the New York Automobile Show, because it was not in production. But to put it in production Walter
Chrysler needed to raise external funds. Eventually he came up with a very inventive idea—to park his car in front of the building in which the show took place. Going to the show, exhibitors and investors had a chance to see the Chrysler Six. Chrysler’s efforts led to success—a Chase Security
Banker underwrote a five million dollars issue of Maxwell Motor Corporation
(the company of which Walter Chrysler was a chairman) debenture bonds to finance future development.

In a year Walter Chrysler purchased Maxwell Motor Corporation, renamed it to Chrysler Corporation and became the only owner of it. The new company was growing very fast. By the end of the year Chrysler Corporation had
3800 dealers in the United Stated alone. The profit that year was about
$17 million.

In 1934, the company introduced Airflow to the market. This car was a result of engineer Carl Breer’s and Orville Wright’s work. They had been working on a new generation of cars with a teardrop front. Unfortunately this car did not match customers’ tastes. However the company recovered thanks to innovations like ball bearings treated with Superfinish, a forerunner of the automatic transmission (fluid Drive), and the color-coded
“Safety-Signal” speedometer. The company continued this success in 941, when it introduced the luxury-oriented Town & Country wagon. This was the company’s first minivan with nine-passenger seating and a rear hatch.
Besides that, it was the first minivan with genuine wood exterior panels.
This model was in big demand.

On August 18, 1940, the company was shaken by grief: Chrysler
Corporation’s founder, Walter P. Chrysler, passed away.

In 1955, Chrysler Corporation debuted its “master piece”—Chrysler C-
300. This car was the most powerful full-size car in the world, and soon won twenty out of forty races conducted in 1955.

Chrysler Corporation played a big role in production for military service during World War II. The company’s full capacity was directed toward production of tanks and 40mm trailer-mounted anti aircraft guns. In total, Chrysler participated in sixty-six military projects that were worth of more than 3.4 billion dollars between 1940 and 1945.

With the beginning of the era of space conquest, the Chrysler
Corporation actively participated in the construction of powerful engines used to launch astronauts into orbit. NASA chose Chrysler to construct the
Saturn 1 and Saturn 1B launch vehicles, which were assembled at its plant in Louisiana.

In May of 1998, an event took place that led to huge changes in the auto world. Two of the world’s most profitable car manufacturers, Daimler-
Benz and Chrysler Corporation, agreed to combine their businesses in an equal merger.

History of Daimler-Benz

On October 1, 1883, Karl Benz started his own company, which was called Benz & Cie, Rheinishe Gas Motor Enfabrik. Benz’s cars increased in popularity after he started to build multiple cylinder engines with 16 horsepower, which increased the speed. The sale of automobiles was increasing every year. In the single year of 1901, Benz & Cie sold 2,702 vehicles. By that time, Benz was selling his vehicles in France, England,
Russia, United States, and Singapore. Two years later at the age of 60,
Karl decided to retire from the car business and the company was taken over by his sons, Eugen and Richand. On April 4, 1929, at the age of 84, Karl
Benz passed away at his house at Ladenburg. At the present time, Karl Benz is considered to be a pioneer in car building in Germany and worldwide. In
Germany, Benz is a history figure and often there are signs at Mercedes dealerships, which say, “Father Benz."

During World War II both companies, Benz & Cie and Daimler-Mototern-
Gesellschaft, were ordered to change their production lines for military purposes. Both companies stopped making cars and began the production of
Benz & Cie aircraft engines. DMG was building the aircraft. 1916 was a dramatic increase the number of employees in Benz and DMG factories. The number of workers of the Benz factories increased from 7700 to 12,000 and
DMG’s workers increased from 3750 to 16,000. When the war was over, thins became very difficult for the German car builders. Many car-building companies had stopped production and had to close down their factories.
Both Benz and DMG were greatly affected by the war and by 1924, the presidents of both companies signed a merger agreement, “Agreement of
Mutual Interest,” which made them into one company.

During this time, the Mercedes model became very famous and recognizable around the world. Due to the increased popularity of the model Mercedes, the new company was named Mercedes-Benz. The name Daimler-
Benz was used also. For the next decade, the Mercedes-Benz dominated the
German automobile market. Mercedes sales were much higher than the other
German car companies, such as BMW and Opel.

In the early 1930’s history repeated itself with the rise of Adolph
Hitler. The management of Mercedes-Benz began gradually to lose control of the company. The new government brought the vehicle under strict regulation. The whole German car industry was taken over by the National
Socialists. Hitler announced that the production of German cars would be
“drastically reduced” (Kimer, p. 276, 1986). In the mid 30’s the Mercedes-
Benz factories were beginning to be used for military purposes. This idea was given by Jakob Werlen, the former manager of Mercedes–Benz, who later became Hitler’s personal advisor of transportation. An interesting fact is that Hitler had many kinds of cars, but whenever he was photographed in a vehicle, it was a Mercedes. One of Hitler’s favorite models was his parade car, type 770, the “Grosser Mercedes” (Kimer, p. 282, 1986).

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