- Not mine, but a W210 of the same colour. Yes... I bought a car in this colour.

Franken Merger - Daimler and Chrysler

1w ago

353

*Bing* “Brake lining wear – visit workshop!” **

The first message flashed across my W210 E240’s multi-function indicator in the instrument cluster.

“What’s happening,” asked my wife, but before I could answer another *bing* sounded with the message “ABS-System – Visit workshop!”; then another “Brake Assist – visit workshop!”; and then another “ESP – visit workshop!”

“Maybe we should pull over?” my wife opined. She was right, of course, but I did a quick mental calculation. The next town, Queanbeyan, was about 20kms away (about 12.4 miles) and the car seemed to be driving well enough. My working assumption was that something was awry with one of the brakes or the ECU. This is one of those very silly assumptions, by the way. Lesson here. Never make assumptions like this with family aboard.

It was the end of summer holidays and I was heading back from the South Coast with my wife, my three children and a friend of the youngest child. The car was an estate, or “station wagon” in Australian parlance, and my youngest plus friend were sitting in the rear facing seats. Until this time, I’d been grateful they hadn’t thrown up during the journey up the coastal mountain road. Now I knew we’d not be making it much further than Queanbeyan. As it turned out… we didn’t even make it that far.

“Engineered like no other other car in the world"

The above was the byline in Benz commercials during the early 1990s. “50,000 crash tests”, “Aircraft construction”, “Safety First”, “Lasting Value”. In 1988 I drove a 300E and, for a time, I owned a 190E. Both superb cars. Both engineered to the hilt. But the W210 E240 wagon I was driving back from the coast, then only eight years’ old, threw more error messages than I could comfortably handle. What had happened between those icons of engineering in the 1990s, such as the 300E or the 190E, and this… “car”?

This car was both the symptom and the problem of the merger between Daimler and Chrysler. Jürgen Schrempp, Daimler’s chairman at the time, believed the 1990’s acquisition narrative. Indeed, the proposition appeared compelling. Two large manufacturers combining to straddle the market from the luxury segment to the younger buyers. Also, the potential cost savings in research and shared platforms should have made the merger not only potent, but profitable. The Daimler-Chrysler merger should have been a powerhouse that had other companies quaking in fear. It should have rocked the automative industry.

It should have, but it didn’t.

“Will we make Queanbeyan?”

“I think so,” I replied, but in truth I wasn't sure. I suspected a brake pad may have worked loose and even then I should have stopped. However, I continued on because of the thought “only a few kilometres more.” In retrospect, and to my discredit, it is this type of hubris that brings ruin. The same hubris that causes CEOs to make bad choices.

We approached a round-about some 11 kms from Queanbeyan and, taking it as gently as possible, I heard a “thunk” and the driver’s front end of the car sank.

“Something came from under the car,” chimed my daughter in the back. “It looks like a spring.”

Fortunately, there was a verge just after the round-about that I managed to drive into. I turned off the engine and sat back, speechless.

“What’s happened?” asked my wife.

“I don’t know, but I think you’ll need to ring Liz*** [my daughter’s friend’s mother] and ask her to bring the van. I don’t think this car’s going anywhere.” I sighed.

Merger of "Equals"

The merger between Daimler and Chrysler began in 1995 and completed in 1998 with an exchange of shares. In truth, it was less a merger and more of Daimler taking over Chrysler. However, in order to work together, it was quickly realised that German engineers would have had to design cars using parts created by American engineers and vice versa. A global management team should have had oversight of this and developed a strategy to maximise integrating the best of both worlds. However, none of it happened. The two organisations operated in a tense separation where American engineers felt they weren’t taken seriously by their German counterparts; and the German engineers felt the Americans would take every cost-cutting approach possible.

There were other differences that made the merger a train wreck from its onset. Pay differences, managerial structures… it’s now in text books for students of business to examine in how *not* to conduct a merger. But the problem in the merger become evident in the cars produced. I, unfortunately, happened to own two. A 1999 W210 E240 and a W168 A160. Both horrible cars.

The W210 I’d bought had a number of issues stemming from poor design and manufacturing. These included:…

* RUST -- This is what got me, but more on that later. The body panel rust from the use of stretched metal coupled with the decision to experiment with water based paints, but it also had rust along brake lines and structural parts.

* POOR ENGINEERING -- Harmonic balancer disintegrating... autos not starting because of a failure of the brake light switch. Hard to believe, but the brake light switch was how the ECU sensed you had your foot on the brake... failure of injector seals

... the list goes on. It was an impressive demonstration of how the engineering culture had changed from “over engineered” to “engineered to cost”. From cars like the 190E, designed to be operational in 10-20 years’ time, to cars that broke down in as little as 3-5 years.

"That's not a spring!"

I joked in my best Paul Hogan voice and held up what, only a few minutes beforehand, had been propping up the front of our car. “This is a spring!”

My wife walked back to the children and I sighed, waiting until Liz arrived with her van, laughing. “So much for German engineering,” she quipped, poking her head out the window. “We’d better get the horde into the van!”

Whilst children and luggage moved from the E240 into, oddly, a very German VW van, I rang for a tow truck and waited. With family safely on their way home, I knew this would be expensive.

One Automotive Manufacturer – Going Cheap

In 2007 Daimler sold Chrysler and ended up paying over $600 million to do so. Only nine years beforehand it’d paid $37 billion. It must’ve hurt many pockets and, indirectly, it’d hurt mine.

What had happened to my E240 was the front spring perches were only spot welded to the body – presumably one of the many cost saving measures in that car. In order to prevent water ingress it was covered with a “mastic”. Of course, in time water did enter as the mastic cracked or moved, and when the spring perch rusted the suspension collapses. Luckily the car remained controllable and when Daimler finally acknowledged the problem the fix was to remove the mastic and bolt the spring perch back onto the body.

Indeed, I was fortunate in several ways. First, it did not happen up the mountain road some thirty minutes earlier. Second, we were driving during a week day and there was almost no traffic on the road. Finally, we were in mobile communication of help. No one died or was injured. The only casualty, in the long run, was my wallet.

“The Best or Nothing”

There is, of course, a third option. Less than nothing...

After taking the car to the local Benz dealer I was in two minds to simply scrap it, as suggested by my wife, or repair it with a view to sell it. Again, I made the wrong choice and decided to repair and sell. I based this on the quote, which was 40% less than the lowest price I could find for the car. But this car, and fate, were not yet done with me. The repair ended up costing nearly twice the estimate! It would be easy to blame the dealer, but truth be told I should have realised that the damage was more than to the spring. As it turned out, rust had penetrated a lot of the structural frames and these needed replacing.

In the end I, like Daimler before me, sold my “asset” at a loss. I’d spent $5000 fixing it and sold it, less auction commission, for about $4000. In retrospect, it was a cheap lesson. Well, it would’ve been if I’d learnt it (we will not discuss the SAAB I bought this year!)

Also, there was a lesson for Daimler. If you build a brand on its engineering excellence, then there are only so many cheques you can write against that heritage without backing it up. I’ve test driven a number of recent Benzes and, to me, they appear to be much better built than my old W210 and W168. But they do not appear to be that much better built, if at all, than, say, a BMW, Porsche, Lexus or even a Mazda. It would appear they are still cashing in those cheques from a reputation built before 1995. But perhaps they’ve changed?

"You're my second customer today"

The tow truck driver appeared to be both smoking and eating a roll-your-own cigarette. It was an impressive feat.

Between drags he asked, “Are they any good. I mean, these E classes?” He nodded to the back where, sitting sadly on his trailer, was my E240. "I see a lot of them around and I was thinking of buying one for my wife. She'd like the idea of a Mercedes. So, any good?"

I thought back to all my previous costs. I’d replaced the brake lines that'd rusted a year earlier; the window actuator (broken); the MAF sensor; the crankshaft position sensor (left me stopped in the middle of the road – luckily at night!).

I sighed. “No, not really.”

** This happened to me. I actually can’t remember what the series of messages were, but I remember there were an awful lot of them.

*** Obviously my name can’t be changed, but others involved in the embarrassing saga have been.

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