Wilhelm Kissel was a general director of the company in the mid and late 30’s. He tried to keep his company free from government involvement, but this proved to be too difficult. By wartime, the Mercedes-Benz factories were basically making military products. By the time Hitler started the war with the U.S.S.R., Mercedes-Benz was making all kinds of army equipment. The German army needed the best machines and Mercedes-Benz factories were producing planes, trucks, tanks, and various kinds of engines. The most famous Mercedes war product was a military plane called Msserschmitt. This plane made the Luftwaffe the best airforce in the world. The Msserschmitt was considered the best plane at that time; it had a Mercedes DB 600 engine, which made this plane much faster than any other planes in the world (Kimer, p. 283, 1986).

In 1945, after the end of the war, all of the Daimler-Benz factories, much like the rest of Germany, were ruined. An American reporter wrote about what he had observed in Germany right after the war - “Cities were dead, factories idle bridges down, rails gone. Rubble was everywhere” (Kimer, p. 283, 1986). World War II completely destroyed Daimler-Benz, at one time the world’s largest automobile company.

It took more than three years to rebuild the factories. However, many divisions of the company were lost because they ended up in East Germany. At first the company was rebuilding U.S. army vehicles. By 1949, over 6,000 cars had been built and the main focus of Mercedes-Benz was again the production of luxury cars (Kimer, p. 290, 1986).

Within the next two years, the company was completely rebuilt and the number of employees since the beginning of the war was doubled. Now the number of workers was almost 40,000. By the year 1952, Mercedes-Benz had built 100,000 cars and 250 in the United States. In 1955, the new models 220, 300, and 300S were introduced in a Frankfort Auto Show and the model 300S was named the car of the year. From that time, Mercedes started to export more cars around the world. However, most of the cars were sold in Germany (Consumer Guide, p. 32, 1986).

By 1960, the Mercedes was the number one selling car in Germany, but at the same time, the BMW became a very close competitor. Mercedes lost a large share of the market to BMW. This was a time when the company started to look for new markets. The United States was a promising market for the Mercedes. In the early 60’s the company increased its sales to 50,000 cars sold in the U.S. (Consumer Guide, p. 46, 1986)

However, in the mid 60’s, the sales went down. The new 190D four-cylinder diesel model did not sell well in the U.S. and Europe. It took the company three years until it became one of the leaders of the market. In 1970, Mercedes introduced three new models, which they called the “New Generation.” The new models were 280S, 280SE, and 280SL. By that time, the Mercedes became the number one imported car in England, France, Belgium, Holland, Switzerland, and Austria (Consumer Guide, p. 48, 1986).

Another reason why the Mercedes became one of the most popular cars in the world was its participation in auto racing. In the late 60’s, Mercedes cars participated in nine races and won seven of them. After tremendous racing results, people around the world wanted to purchase the C-111 model which would set up three new world records; however, Mercedes would not make this available to the public for sale. The company was receiving a thousand letters a day with offers buy the C-111 model and in 1976 the similar model C111-11 was introduced at the Geneva Automobile Show. The new model had tremendous power. It had 350 horsepower, and it could get from zero to sixty mph in six seconds. Its top speed was 190 mph. Also, the C111-11 Diesel set a new record in durability by running at a speed of 156 mph for 10,000 miles straight (Consumer Guide, p.55, 1986).

In 1982, the 190 series was one of the best selling models in the world. The 190 model was a small sized car which opened for Mercedes an entirely new market. In Germany, this model became a best selling car in 1985. This was a very important establishment for Daimler-Benz because the 190 model became the number one selling small car in Germany, leaving the long-time leader, BMW, in second place (Consumer Guide, p. 64, 1986).

In the early 1990’s, the Mercedes market share in the United States was greatly decreased. The reason for this was that the Japanese car companies started to produce luxury cars. For example, Toyota was manufacturing Lexus, Honda was manufacturing Acura, and Nissan was manufacturing Infiniti. These cars today are becoming increasingly popular among Americans. However, German management found a way to overcome the competition by building a Mercedes factory in Alabama in 1994. Now, a large share of Mercedes cars sold in the U.S. are produced by American labor. Producing Mercedes in the U.S. has solved many problems for the company. Many people in the U.S. have an opinion about buying American-made cars with the purpose of supporting the American economy. The second problem was that tax on imports was greatly reduced. The cost of a German laborer was 50% higher than an American laborer in Alabama. By building cars in the United States, all these problems were solved (Fortune, p. 150, 1997).

Similarly, Mercedes used the same strategy in South America. It built a new plant in Brazil. This plant decreased the prices of the cars and made the purchase of a Mercedes more affordable for the South American region (Motor Trend, p. 123, 1997).

In the past five years the demand for 4x4 vehicles has been increasing. Two years ago, Mercedes came up with a new M-class jeep model. The price of the is jeep is around $34,000, which is competitive with the American-made Chevy Blazer, Ford Explorer, and Grand Jeep Cherokee. By making a jeep, Mercedes is keeping up with its competitors for this share of the market. The new jeep is a success because it was named the 4x4 truck of the year for 1998.

Short summary of current position of DaimlerChrysler

Company ownership: European, U.S. and other international investors own DaimlerChrysler; there are approximately one billion shares outstanding. 65% is made up of European investors.

Global Stock: DCX ordinary shares are traded on the New York and Frankfurt stock exchanges as well as nineteen other major stock exchanges worldwide.

Group Headquarters: Stuttgart, Deutschland, and Auburn Hills, Michigan, USA.

Chairmen: Robert J. Eaton and Jurgen E. Schrempp

Management Board: Consists of fourteen members, including the two chairmen and the heads of the operation and functional divisions.

Supervisory Board: Consists of ten shareholders’ representatives and ten employees’ representatives. The Supervisory Board appoints the Board of Management and approves major company decisions.

Market Capitalization: Currently about EUR 80 billion (March 1999)

Investments: 1999-2001: EUR 46 billion to be invested in the future of DaimlerChrysler

Automotive Sales: 4.5 million units in 1998 (Passenger Cars and Commercial Vehicles)

Employees : 466,900 at the end of 1999

Manufacturing Facilities : in 34 countries.

Global Brands: Mercedes-Benz, Chrysler, Plymouth, Jeep, Dodge, Smart, Freightliner, Sterling, Setra, Airbus, Eurocopter, Ariane, Debis and others.

Product sold : More than 200 countries

Official Language: English

Financial Reporting : US-GAAP accounting with earnings reported quarterly.

Reasons for merging and new opportunities.

In 1998, at the Detroit Auto Show, the idea of cooperation of Daimler-Benz and Chrysler Corporation was born. Schrempp, Chairman of Daimler-Benz and Eaton, chairman of Chrysler Corporation, began negotiations about possible combination of two large automobile manufacturers. “We are leading a new trend we believe will change the future, the face of the industry,” Eaton said five months later when the deal was announced.

The two chairmen acknowledged that the merger would not be easy. Their own study of transnational mergers suggested that 70 percent failed to achieve the kind of success that had been anticipated.

As a result of the long series of negotiations, a new company named Daimler-Chrysler was established. The company would manufacture not only cars, but commercial trucks, trains and rockets as well.

The goal of the merger was to create a company that would be able to stand better against other world leading car producers like General Motors, Ford, Nissan, Volkswagen, Toyota and so forth.