You have to wonder how much more DaimlerChrysler's market value has to fall, how much more money has to be frittered away on bad investments, or how many more of its nameplates have to lose market share before chief executive Jurgen Schrempp is finally given his walking papers.
In the latest chapter of this tale of corporate ambition and arrogance, DaimlerChrysler AG's management board -- essentially the top dozen executives -- refused to go along with Schrempp's plan to pour another $5 billion into money-losing Mitsubishi Motors Corp., on top of the $3 billion it had already paid for its minority stake.
Such an insurrection would have toppled a lesser corporate politician. But a week later, when the decision to pull the plug on Mitsubishi was ratified by the board of directors, it was Schrempp who somehow emerged with a vote of confidence, while one of the leaders of the revolt, a 43-year-old up-and-comer who was scheduled to take the helm at Mercedes, found himself without a job.
The Mitsubishi fiasco, along with a decision a few days later to sell DaimlerChrysler's 10 percent stake in Korea's Hyundai Motor Co., leaves Schrempp's grand vision of a global auto company in shambles.
It began, of course, with the bold move to acquire Chrysler under the pretense of a "merger of equals." In the six years since, Chrysler's share of the U.S. auto market has declined from nearly 16 percent to as low as 12 percent, as once top-selling Jeeps and trucks and family vans lost their edge. And despite heroic efforts that cut $7 billion from Chrysler's annual operating costs, the division was able to eke out only a $250 million profit last quarter -- hardly an acceptable return from a $36 billion investment.
Ironically, it was the linkup between Mitsubishi and Chrysler -- using common parts and platforms, with much of the engineering and production shifted to Asia -- that was supposed to produce the big payoff from global integration. Company officials were quick to assure last week that the collaboration would continue, but it wasn't clear how that's possible if a money-losing Mitsubishi can't refinance and is forced to close.
Meanwhile, the problems with Chrysler and Mitsubishi have diverted capital and management attention from the one division that produces the lion's share of DaimlerChrysler's profits. As a result, not only is Mercedes-Benz losing market share to rival BMW AG, but its quality ratings have tumbled badly.
All of these woes are now reflected in DCX market capitalization, which has fallen by $35 billion since Schrempp began his global quest. But the chairman remains unrepentant, actually telling a German magazine this week, "I don't see where our strategy is faltering."
In fact, both strategy and execution were badly flawed.
History is full of failed attempts to achieve global scale through acquisitions. Overeager buyers invariably overpay while underestimating the problems of integrating different cultures.
Nor does it turn out that global scale is the key factor in an auto industry burdened with massive overcapacity. Most of the success stories involve companies that produce unique products aimed at limited markets for which they are able to charge a premium price. In theory, a global company working off a limited number of shared platforms and basic parts should be able to do that quicker and cheaper. But in practice, the countless compromises needed to achieve global "commonality" often get in the way of coming up with the distinctive new products that consumers want to buy.
So what now? The betting in the industry is that Mitsubishi Motors will fail, with DaimlerChrysler picking up its most valuable parts. Chrysler is likely to be spun off and reduced to a second-tier producer of trucks, vans and SUVs for the North American market. And Daimler, under new management, will finally do what it should have done in the first place: Restore the luster to its Mercedes brand and slowly evolve its product line and global footprint.
Steven Pearlstein will host a Live Online discussion at 11 a.m. today at www.washingtonpost.com. He can be reached at firstname.lastname@example.org.