Analysts attributed Chrysler’s financial problems to its poor business management. In the early
1970s, when fuel prices were going up and consumers in the United States started preferring
fuel-efficient vehicles, Japanese companies like Toyota and Honda began coming out with
compact and fuel-efficient cars to cater to these needs. However, Chrysler’s focus remained
more on SUVs and trucks, leaving the Asian carmakers to capitalize on this change in consumer
preferences.
Other analysts criticized Chrysler’s decision to merge with Daimler. According to
Iacocca, “Eaton50 panicked. We were making $1 billion a quarter and had $12 billion in cash,
and while he said it was a merger of equals, he sold Chrysler to Daimler-Benz, when we should
have bought them.”51
Similar analysts also criticized Daimler’s decision to run Chrysler as a stand-alone
division. They opined that Daimler wanted to keep Chrysler separate from its luxury
Mercedes-Benz marquee. By doing this, it did not take advantage of the benefits of developing
vehicles together.
Analysts attributed Chrysler’s financial problems to its poor business management. In the early1970s, when fuel prices were going up and consumers in the United States started preferringfuel-efficient vehicles, Japanese companies like Toyota and Honda began coming out withcompact and fuel-efficient cars to cater to these needs. However, Chrysler’s focus remainedmore on SUVs and trucks, leaving the Asian carmakers to capitalize on this change in consumerpreferences.Other analysts criticized Chrysler’s decision to merge with Daimler. According toIacocca, “Eaton50 panicked. We were making $1 billion a quarter and had $12 billion in cash,and while he said it was a merger of equals, he sold Chrysler to Daimler-Benz, when we shouldhave bought them.”51Similar analysts also criticized Daimler’s decision to run Chrysler as a stand-alonedivision. They opined that Daimler wanted to keep Chrysler separate from its luxuryMercedes-Benz marquee. By doing this, it did not take advantage of the benefits of developingvehicles together.
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