DaimlerChrysler Australia: Business as usual

MERCEDES and Chrysler might have split globally, but will remain ‘joined at the hip’ in Australia.

That is the assessment of Chrysler Group Australia managing director Gerry Jenkins in an exclusive interview with GoAuto.

Mr Jenkins confirmed DaimlerChrysler’s Australian operation would split into two separate companies, but added that they would continue to share many of the same staff and facilities.

“Going forward we need to have two separate entities. However, and this is where there is a departure from that, we are going to continue to use a lot of back-end synergies,” he said.

“So we will continue to use the accounting structure, the finance, the HR, the legal, the IT systems and the facilities.”

GoAuto understands that the Daimler side of the business will provide many of the services, which would be ‘rented out’ to the Chrysler side.

Mr Jenkins said both companies planned to stay at the current DaimlerChrysler Australia headquarters in Mulgrave, east of Melbourne, working side by side in the same building.

“We were an integrated part of DaimlerChrysler, we will become Chrysler Australia, but we will be clearly joined at the hip with the Daimler part of the business,” he said.

“We will still be in Mulgrave and we don’t see any change in the foreseeable future there.”

Despite there being two large separate buildings at the Mulgrave facility, Mr Jenkins does not expect the two workforces to separate.

“The way we operate is totally unique. We are in building A currently and we are all in one area, so I don’t know if there is really a need to move to building B because there are Daimler people in building B as well,” he said.

Mr Jenkins admitted that many details had yet to be confirmed, including how the infrastructure costs would be determined.

“Those discussions are really going on right now,” he said.

Whatever happens, Mr Jenkins is confident the corporate changes will not affect customers.

“It is relatively business as usual and that goes for the dealer network as well,” he said.

“From a consumer perspective, there shouldn’t be any dramatic difference in what they see,” he said.

Mr Jenkins admitted the process of separation was complicated.

Left: Mercedes and Chrysler co-developed ‘Bluetec’ clean-burning diesel engines.



“That’s why it is not going to happen in the next days or so it is something we have been in very detailed discussions about with them over the last four weeks and we will continue over the next four or five weeks to discuss that and the appropriate services they will be rendering to us,” he said.

Mr Jenkins said the separation would be a ‘learning experience’ for him and his team.

“I have never been through this,” he said.

“I have been through two mergers. We bought American Motors and then Mercedes bought us, so I have been there when we bring things together, but this is the first time I have been involved in something that has separated us.”

DaimlerChrysler AG announced in May that it would sell all but 19.9 per cent of Chrysler to private equity firm Cerberus Capital Management for $US7.4 billion.

It was a stunning about-face after the German car-maker bought Chrysler in 1998 for $US36 billion to create a multi-national auto giant.

Mr Jenkins said the fact that the Mercedes-Benz parent company, which is expected to be renamed Daimler AG, had retained a stake in Chrysler gave it continued access to the latest German technology.

“Mercedes, with a 20 per cent stake in Chrysler, has a vested interest in our success and are not about to just walk away,” Mr Jenkins said.

“We have gone on record to say there are going to be on-going projects in regards to engineering and component sharing, so that was really critical to Chrysler’s success.”

Mr Jenkins said he had remained upbeat about Chrysler’s future throughout the sell-off period.

“I felt very confident that with the core people that we have, with the product plan, I felt very confident that the future was solid, as I do today,” he said.

He does, however, admit feeling relieved when details of the deal were made public.

“It was good once it was announced because finally it was out in the open and we could all adjust ourselves accordingly.” Asked if there was any talk of cuts to the Australian operation, Mr Jenkins made it clear that he was not expecting any.

“None whatsoever,” he said. “Quite contrary, they are asking us to build a business. We are very confident. The future is very bright for us.”

Mr Jenkins pointed to recent comments by Chrysler CEO Tom LaSorda, outlining the importance of international markets as US sales soften.

“Even LaSorda has openly said that the secret to our success in the future is going to be how good we can grow the business outside the US. So the strategy going forward is to continue to grow our business outside North America,” Mr Jenkins said.

However, he made it clear that not all new Chrysler Group models would be built in right-hand drive and left-hand drive.

“Everything has to make good business sense,” he said.

“At the end of the day, simply because the company builds a left-hand drive of a particular model will not guarantee that we will build it in right-hand drive.

“There has to be a solid case for profit, otherwise the company will not make an investment. That is just the way we think and I don’t see that changing.”

Chrysler Group Australia sales have grown overall in Australia, thanks largely to the new Dodge brand.

To the end of May, however, combined Chrysler and Jeep sales sat at 3391, 13 units below the number of vehicles sold for the same five months in 2006, despite growth across the industry.

The real boost for Chrysler Group Australia comes when you factor in the contribution of Dodge, which has added 427 sales to the end of May.

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