Lee Iacocca Speaks Out: "Daimler Screwed Chrysler"

My phone started ringing off the hook the day Daimler's (DCX) deal to sell Chrysler to Cerberus was announced. The reactions were mixed. Some people thought it was a hell of a deal. Others thought it was a deal from hell. More than one person mentioned that Cerberus was named after the three-headed monster in Greek mythology that guards the gates of Hades. Mostly, though, the people I talked to wanted it to work because they cared about Chrysler and about the future of the American auto industry.

There's one thing everyone agrees on: Daimler screwed Chrysler royally. To understand how the desperation sale to Cerberus Capital Management could possibly happen to one of America's iconic car companies, you have to look at the history. Chrysler's merger with Daimler-Benz nine years ago was a disaster from the start. At the time, Chrysler was making a lot of money—something like $1 billion every quarter. The minivan was a cash cow. The Jeep Grand Cherokee and Dodge Ram pickup were selling like crazy. There were 4,000 profitable dealers, a brand-new $1.5 billion research center, and $12 billion in cash. Chrysler was the lowest-cost producer and the most profitable car company in the world, with sales of 2.5 million cars and light trucks. But it took Daimler less than a decade to drive Chrysler off a cliff.


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S4cabriofoxone - 5/18/2007 11:30:36 AM

+6 Boost

I don't think it was just Daimler that drove Chrysler to ruin; there were many other factors, such as, how do you expect the Dodge Ram to set sales records when gas goes from $2.00/gal to $3.50/gal in that time period? And how about getting some better designers and accountants?

w209w114 - 5/18/2007 11:36:48 AM

+6 Boost

I agree. Especially with the designs. They should have worked more closely with the european designers Just look at GMs new OPEL based saturn Sky and Aura. Probably one of their best car designs in the last years. If only Ford could learn as well

cckw - 5/18/2007 11:35:18 AM

+8 Boost

Look who is talking? Didn’t Lee screw Chrysler big time as well?

chuck717 - 5/18/2007 12:54:02 PM

+7 Boost

Come on Lee get real there is a laundry list as to why this company should be put out lets just examine one aspect my friend:
Smoking sales consultant puts cig out as soon as he sees you, where is the red pt cruiser conv with tan int you advertise sales person, we ran a ad? I'll if i can find it 20 minutes later we sold it but we have 4 blue ones? Okay lets test drive it the interior seeems to be a lot of plastic sales person, yeah this company makes bad interiors we hear it all the time but we will make you a great deal so who cares.
After 4 hrs they stii have no idea of what the car can be bought for, look Lee if the company wanted a turn around you can't do business as usual guy.
You have to offer much more in the way of customer satisfaction and stop the we have hemi in every car and it goes 0-60 in 5 sec at 12 mpg? The whole thing is hopeless go bye bye Chyrsler nobody will miss you but lay downs and forget the blame game MBZ didn't own you in the Horizon,K Car era, you did that all yourself???

enthusiastx11 - 5/18/2007 12:59:29 PM

+4 Boost

daimler screwed chrysler? that's rich.

daimler sold chrysler for a fraction of what they paid...losing tens of billions of dollars in the process. meanwhile, a good number of chrysler execs got rich quick in the deal.

chrysler execs screwed chrysler. they have noone to blame but themselves.

EnnNorak - 5/18/2007 2:28:38 PM

+4 Boost

Well it takes one to know one and people who live in glass houses should not throw stones. I along with a number of my friends drove Chrysler cars during the Lee era and I quickly discovered a number of design shortcuts the worst of which involved subframes rusting out with structural failure at highway speeds.

no1listensanyway - 5/18/2007 5:54:37 PM

+3 Boost

I can really see both sides to this argument. Chyrsler was on top of its game when they were bought and were worth their asking price.

Then again, Chyrsler got kind of lazy with their products and engineering after the merger. That could be attributed to either Mercedes or Chrysler. I have a feeling upper management from bothe sides were constantly in a fight with each other and the chyrsler guys just gave up.

Also, with all those years they were together, what did Daimler actually bring to the table? All they brought was cash that obviously wasn't spent on R&D. All daimler gave them was two old platforms for the 300c/magnum and the Crossfire.

I think ultimaley they screwed each other. In retrospect, I think Daimler should of just bought a stake, not take the whole thing over.

S4cabriofoxone - 5/19/2007 11:03:50 AM

+1 Boost

But, of course, Mercedes still knows how to design amazing cars, as opposed to Chrysler's recent crap-o-matic lineup...

truecarlover - 5/19/2007 7:06:36 PM

+1 Boost

I agree. Lee is a history revisionist. He makes it sound as if Chrysler was as successful as Toyota is now. Chryler gladly benefitted from the engineers at Daimler-Benz, while Daimler benefitted buying cheaper materials by combining their purchases with the rest of the Chrysler group. That is why they still are maintaining a small percentage of the new Chrysler (I think it's still %15). I think once the contracts they started together expire - the stake will get lower - but Daimler still would like the purchasing power. It was still a horrible marriage thought of by greedy executives.