Chat Transcript: Author Bill Vlasic and Bradley Stertz

July 24, 2000 -- From the outset, Daimler-Benz’s $36 billion buyout of Chrysler, one of America’s Big Three automakers, was a battle of epic proportion and enormous global importance. With vivid descriptions and meticulous reporting, Taken for a Ride: How Daimler-Benz Drove off with Chrysler tells the full story — with in-the-boardroom intimacy.

Authors Bill Vlasic and Bradley Stertz joined us today for an online chat to discuss Chrysler and the U.S. auto industry.

Moderator at 2:57pm ET

Welcome to the ABCNews.com chat with authors Bill Vlasic and Bradley Stertz. Let's begin.

Interested Investor at 2:58pm ET

What response/reaction has your book received by now from the corporate suits in Stuttgart? Are the Germans as unconcerned about American popular opinion as they appear to be?

Bill Vlasic at 2:59pm ET

First of all, no one at Daimler Chrysler has challenged any of the events of accuracy of the book. That being said, I don't believe the Germans are that concerned with perception of a takeover by Americans. They clearly are in charge, they clearly won, if you well and I believe they like to win. So, I don't believe the book has caused them to lose any sleep. However, as Daimler Chrysler faces rocky times, I do believe they are feeling some heat in how the merger has fared to this point.

Bradley Stertz at 3:01pm ET

I think they are concerned that the level of American investors has plummeted. That also conflicts a bit with their sense that they are definitely in command in calling the shots. So those are two contradictory signals that they have to contend with. That's partly why you see their effort to take over floors in the Chrysler building; just for symbolic image reasons among other arguments for doing that.

Todd Kewley at 3:02pm ET

Some press reports immediately after the merger made Bob Eaton out to be naive and something of a "patsy" in his dealings with Daimler. How much of that perception, in your view, is accurate?

Bill Vlasic at 3:03pm ET

Some readers of our book think the title "Taken For A Ride" refers to Bob Eaton being taken advantage of by Jurgen Schrempp. We believe that Eaton was convinced this was a good deal during the negotiations. Our sources tell us that afterwards he didn't realize he had given up the store to Daimler just to get the deal done. If that makes him naive in some people's minds, I think that could be considered accurate.

Bradley Stertz at 3:06pm ET

One of the things that was pretty clear in our research was that the Germans and Jurgen Schrempp were far more prepared in how they wanted to accomplish this goal and actually had a well thought out game plan, if you will, that exceeded anything the Americans had time to think about. The other difference is that Schrempp had a loyal team around him strategizing the details of the offer to Chrysler. But Eaton was almost a solitary figure in many ways who noodled through some of this stuff by himself or with a couple of advisors, so he didn't have this backup. He was working alone in many ways.

Jerry from proxy.aol.com at 3:06pm ET

What's the future of Jeep in the Daimler-Chrysler situation?

Bill Vlasic at 3:08pm ET

Jeep is definitely one of the crown jewels of the former Chrysler Corporation and has kind of lagged behind Ford and General Motors in bringing out exciting new sport utilities. I don't think you can blame that on the Daimler acquisition yet. But, the Jeep continues to lag, and of course the Japanese and European automakers are building lots of new sport utilities. If Jeep continues to lag behind its competitors in new sport utilities that will pose serious problems down the road for Daimler Chrysler.

Bradley Stertz at 3:09pm ET

It's pretty clear that the Germans appreciated the cash that Jeep created and the image of the brand, so I'm sure they're not interested in seeing that wither too much.

Chris at 3:09pm ET

It seems to me that Chrysler was really getting on it feet during the late '90s. The freshness and uniqueness of their model lineup seemed to be inspiring... has this deteriorated since the MB acquisition?

Bill Vlasic at 3:11pm ET

Several of the key executives led Chrysler's comeback in the 1990's either left the company just prior to the merger or have left since Daimler bought Chrysler. You can't even measure how much that has hurt the company from the American side. The champions of Chrysler's product comeback, with one or two exceptions, left. The PT cruiser, which is a hot new product, is really a product of the team that was in place before the merger. The real question is can Chrysler continue to bring out fresh cars and trucks without the executives that led it in its comeback.

Bradley Stertz at 3:12pm ET

Chrysler's comeback was largely the result of a handful of top people sitting around and deciding they could completely overhaul the way they did things. It was that kind of spontaneity that may not really exist as much any more there.

Todd Kewley from va.gov at 3:13pm ET

To what extent did the promised "synergies" between the two firms materialize following the merger?

Bill Vlasic at 3:14pm ET

One of the disappointments with the stock price I believe is based on the fact that they have not saved that much or found a process to sort of take the best from both sides. The stated goal of the merger was that the engineering and research on the Daimler side would improve Chrysler products and the lean mean style of Chrysler would help increase productivity on the Mercedes side. We really haven't seen much of that yet. The merger hasn't produced great savings to date and the so-called integration of the two companies seems to be on the back burner.

Bradley Stertz at 3:16pm ET

One thing that they had talked about was Chrysler contributing small car expertise for a car in Europe. But that doesn't seem to be heading anywhere at the moment. And the Germans are very protective about keeping these products as German as possible and avoiding any intermingling with Chrysler's parts or image or anything like that.

Bill Hazen at 3:16pm ET

What effect did this merger have on product quality, for both Chrysler and Mercedes?

Bill Vlasic at 3:17pm ET

That may be too soon to evaluate. All these vehicles that are being built now were conceived and developed before the merger. But this is an important aspect of the deal going forward. Can Mercedes' talent help improve Chrysler's quality? And if it doesn't, that will be a major failing of the deal.

Bradley Stertz at 3:18pm ET

This gets to a little bit of what I was saying earlier in that the Germans are careful to mix Chrysler quality with Mercedes quality. It takes four, five or six years for a new vehicle to hit the streets, so the substantive gains from the merger could still happen, but they're a ways off.

Tango Mike at 3:18pm ET

What is the reaction in Germany to the dramatic fall of the share price of DCX? How come the business is so good at MB, yet the stock continues the lag the market and other automakers?

Bill Vlasic at 3:20pm ET

We've heard a lot in recent weeks about how Chrysler is the problem behind the fall in the stock price. There's no question that the Chrysler side has hit a rough stretch in the very competitive U.S. market. But, they didn't hit a rough stretch until after the merger, so to blame the Chrysler side for the stock price, I think is a little unfair. However, Germans are long-term investors and don't seem to have the same concerns about the stock price now as the American investors do. At least they're not being vocal about it.

Bradley Stertz at 3:23pm ET

I agree with Bill that the Germans are more patient about these sort of things. Daimler was a different company in their stock market; it was the biggest company in Germany. It had Deutsche Bank holding a substantial stake, which tempered stock volatility in Germany. Now, as a sort of transatlantic company if you will, I'm not sure that the Germans have really capitalized or convinced Wall Street that this company is doing everything that it should be doing right now. Maybe part of it is the natural complexity for a merger of this size and part of it may be that the Germans don't necessarily understand the needs and the expectations of analysts on Wall Street as well as they do as the investors on the DAX index.

Interested Investor at 3:24pm ET

$36 Billion pales in comparison with the $50 Billion being tossed around in the Deutsche Telekom/VoiceStream deal. Is there some German government and Deutsche Bank cooperation going on here? How much of a factor was Deutsche Bank in the Daimler Chrysler deal? Can the USA private sector hold off such combines being thrown at them?

Bill Vlasic at 3:26pm ET

Deutsche Bank was a huge factor in the Daimler acquisition of Chrysler. Schrempp could not have bought Chrysler without Deutsche Bank's full support. It's difficult for us to know, how coordinated corporate Germany's acquisitions are, whether it's Voicestream or Chrysler or any of the other major deals German corporations have pursued in recent years.

But it's clear from our perspective that these are companies in a hugely expansive mode. German companies are determined to grow on the world stage. What I find interesting is how some of the politicians in Washington are registered concern about the Voicestream but said nothing when Daimler bought Chrysler. And the reason why, I think, was because Daimler and Chrysler were supposedly "a merger of equals." Of course, it didn't turn out that way.

Bradley Stertz at 3:29pm ET

Part of why some of the most recent deals have been in larger dollar amounts is communications or tech stocks have a much higher market valuation than heavy industry. German companies have a lot advantages that American companies don't have right now. A good example is why Daimler Chrysler is not an American company, because German tax laws make that kind of a move much more expensive than keeping it in Stuttgart. Furthermore, the Deutsche Bank role was substantial, almost like the Ford family plays in Ford Motor Company, in that they were a sizable shareholder with a significant presence on the board.

Bob Pritchard at 3:30pm ET

Could you perceive of a set of events that would cause Daimler to "spin off" Chrysler - back to its' own entity again? i.e., some miserable failing of the union?

Bill Vlasic at 3:32pm ET

I don't think a divorce is very likely. Right now, Chrysler is operating as a business unit of the company and I truly believe the last thing the Germans want is to screw up Chrysler. They may not know how to run it like it used to be run, but it is generating an enormous amount of revenue for them and has made them a player in this era of supercompanies; GM, Ford, Volkswagen, Toyota.

But nothing surprises us. BMW bought Rover, much smaller deal, but very much in the type of situation where a German firm bought a British firm and gave up on it. But that was a smaller deal, it was a clear case of Rover pulling BMW down. I don't see, because of Chrysler's size and muscle in the American market that Daimler would ever want to give up on it.

Bradley Stertz at 3:33pm ET

It seems with the industry consolidating right now and Schrempp kind of on an empire building mode, a spinoff would be unlikely. If it ever happened it would have to be that they saw some kind value they could unlock that wasn't being appreciated by the stock market. But I think right now it's more important for them to have the size and the foothold in different parts of the world and the revenue that Chrysler can generate.

Stine at 3:34pm ET

What are the priorities of the new owners now that they bought the bargain of the century?

Bill Vlasic at 3:35pm ET

The priorities of Jurgen Schrempp are to grow Daimler Chrysler. This is a chief executive with extraordinarily grand ambitions. I don't believe that Schrempp will tolerate for very long a poor performance by any of his operating units. He's a very aggressive manager. If the Chrysler side doesn't produce, he will demand changes. However, Schrempp is an extremely aggressive builder of companies, the question is, is he an excellent manager of companies? That will be something to watch closely over the next few years.

Bradley Stertz at 3:37pm ET

I think one of the things they have to watch for is not only to maintain the interest of consumers in Chrysler products, but be mindful of Chrysler's reliance on truck and minivan products. And to be prepared if there's a sudden drop off in demand for trucks in the event of a recession or if gas prices go up. But I think the main priority they've set for themselves is to assemble this globe spanning company and build on that.

Jude from gtus.com at 3:38pm ET

Do you think Daimler-Chrysler will use the Chrysler or Smart moniker as its low-cost brand worldwide? Currently, I know that Chrysler is exporting Jeeps, Neons, and Voyagers to Europe and Australia with some success

Bill Vlasic at 3:40pm ET

When the merger was announced, both sides said they could use the Chrysler brand to expand into international markets that Mercedes could not expand into. The thought was that Chrysler could go in lower-priced markets that Mercedes could not. But now it seems that Smart is a brand that the company plans to use for emerging markets. Chrysler won't even be involved in the expansion of the Smart brand because now they have brought in Mitsubishi and Hyundai to pursue their small car strategy.

Bradley Stertz at 3:41pm ET

What's ironic is about a decade earlier there was a debate over whether Americans could still build small cars inside Chrysler and they considered a merger or deal with Fiat. Instead, they went out and built the Dodge Neon. But, it seems to be that the decision is indeed that American small cars just aren't up to the demands that people in Europe or Asia have on a car that size.

Bob Pritchard at 3:42pm ET

What was/is Lee Iaccoca's opinion on the merger? Was he still on the board at the time of the merger? What about Kirk Kerkorian?

Bill Vlasic at 3:44pm ET

In our book, we reveal that the interest of Daimler in Chrylser was a result of Kirk Kerkorian and Lee Iacocca's attempt to take over the company in 1995. Iacocca and Kerkorian believed that Chrysler had far more value as a private company than it did as a publicly traded company. Their takeover was fought off, but the fact is, Chrysler has not fared well in this merger. It's an American icon now owned by the Germans. And while Iacocca has been retired for several years, he and Kerkorian are still stockholders in Daimler-Chrysler and just as disappointed in its stock price and performance as any other American investor.

Bradley Stertz at 3:46pm ET

When we researched the book, Iacocca, and to some extent Kerkorian, were constrained by a non-disparagement agreement. But it's fairly clear, as Bill said, by how the stock has fared and the fact that their deal, in retrospect could have been very successful is still an issue on their minds.

Moderator at 3:47pm ET

Your book is very detailed. How long did it take you research and write it?

Bill Vlasic at 3:50pm ET

Well, both of us have covered Chrysler for a long time. So, a considerable amount of the research was based on firsthand reporting over several years. But, when we got the book contract, that's when a number of people began opening up to us in ways they might not have in the past. For example, we got the first interview with Kirk Kerkorian since 1971. He just does not do interview, he does not talk to the press.

But because we had gotten to know the players so well and had lived with the story for so long, that he became willing to give us an audience. It's a lot different writing a book than reporting newspaper or magazine stories, because if you don't get it right, you can't come back the next day and do another story. So, accuracy was the most important aspect, but we had to also make it entertaining in order to make it successful. So it was a great experience and a difficult task, but it allowed us to draw on really all of our reporting and contact and theories we've had for a number of years.

Bradley Stertz at 3:52pm ET

It took us basically about 10 or so months to research and to write it, and that was the biggest challenge because the story was constantly moving, and we were writing about a living organism that was going through a lot of changes. It seemed that every month or so there was a dramatic change that made the story that much more compelling. That was the biggest challenge, was to keep up with a moving target and still make it interesting to people when it came out six months or so later.

Bill Vlasic at 3:54pm ET

We knew a lot about Chrysler, but we really had to learn a bit about Daimler. Any of the people in the Kerkorian story, or in Chrysler's comeback were sources of ours for years. But we soon learned that the Daimler half of the story was just as dramatic and provocative as what Chrysler had gone through in the 1990's. But while the Americans kind of understood what two journalists do when they write a book like this, Germans were much more apprehensive about what we were trying to accomplish in writing what went on behind the scenes. It was much more of an accomplishment on our part to get the Germans to be open and candid with us than the Americans who had known us for years.

Moderator at 3:54pm ET

We have time for one last question: all things considered, do you feel that the merger was good or bad for the American auto industry? What will this mean for the worldwide auto industry?

Bill Vlasic at 3:56pm ET

No matter the criticisms of Daimler Chrysler, this company does have a great breadth of products, a very strong geographical balance, and quite a good balance sheet at this point. But as far as the American industry is concerned, Chrysler as we know it here in Detroit is gone. They don't talk about the big three, they talk about the big two. Yet it's clear that this type of consolidation is where the auto industry is heading. It wasn't the last deal, and it won't be the last one to get done. So was this a good deal for Chrysler? They may have been able to buy somebody instead of being bought.

Bradley Stertz at 3:57pm ET

I think the bottom line is whether or not this company is successful in the long run, it's probably better to have control of a corporate jewel like this, rather than have somebody else own them.

Moderator at 3:57pm ET

I'm sorry, but we're out of time. Thanks so much to our guests, Bill Vlasic and Bradley Stertz, and to all of you for your great questions.