MARCH 21, 2001

DaimlerChrysler mess makes McLaren F1 prospects look sunny

MERCEDES-BENZ is having a bruising time at the moment. Not as far as its car sales are concerned, for they are thriving.

MERCEDES-BENZ is having a bruising time at the moment. Not as far as its car sales are concerned, for they are thriving. Nor for the short-term problems its F1 partner, McLaren, seems to be having on the Grand Prix trail. That will correct itself over the next few months. No, more crucially, its image is being tarnished by the fiasco of the DaimlerChrysler merger which, in the end, is likely to claim the scalp of its pushy and over-confident top man, Jurgen Schrempp.

Bad publicity is something which Mercedes is not used to and, quite understandably, dislikes. That criticism went up a gear in last weekend's issue of the SUNDAY TIMES whose business section used a review of a new book to launch another attack on Schrempp's operating style.

By any standards, this was stark stuff. The article was headed "Car boss who paid top dollar for a wreck" with a portrait of Schrempp and former Chrysler boss Bob Eaton seperated by a photograph of a badly smashed-up Jeep Cherokee. This was a trailer for a review of a new book by David Waller entitled Wheels on Fire: The Amazing Inside Story of the DaimlerChrysler merger.

It will make uncomfortable reading for the DaimlerChrysler top brass. Far from being a business coup for the Stuttgart brigade, the ST reviewe concludes; "As investors ponder the $50 billion in markert value that has disappeared since 1998, revisionists may well reach the conclusion that the savvy Chrysler boys, steeped in the realpolitik of shareholder value, took the Germans on the ride of their life."

Some while after the merger Schrempp let it slip that he never really regarded the alliance between Mercedes and Chrysler as a partnership of equals, more a takeover. As Waller points out, although Bob Eaton resigned - seemingly bruised and beaten by the force of the Mercedes advance - the American executive may now be having the last laugh. He left with around $70 million dollars in compensation and benefits, contrasting rather nicely against Schrempp's rumoured $2 million salary package.

There is also more potential trouble in store with the UK's Mercedes dealers threatening major legal action against the car maker for threatening to withdraw their franchises. One leading Mercedes dealer has already said that it will pursue the possibility of taking a BMW franchise instead unless the issue is resolved satisfactorily.

Against this turbulent backdrop, McLaren's third and sixth places in the Malaysian Grand Prix look like beacons of promise and optimism for the future. As undoubtedly they are. By the standards of most F1 teams, at least.