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The battle to survive the global credit crunch is about to bring age-old German competitors Daimler and BMW together in a cross-ownership deal, German news magazine Der Spiegel has reported.

Daimler and BMW have been discussing a parts and component sharing deal since last year and it seems that, to cement the deal, the two are also considering taking a significant shareholding in each other.

Questioned about the proposed BMW/Daimler technical co-operation last week at the Geneva s...Read the full article

I'd buy a BMW (I did) but I wouldn't buy a Merc.   I can, however, see why Mercs are popular.

This deal really doesn't appeal to me at all.   They're both in the premium market, so a join between them would be unwise as both firms core values are different and shouldn't be diluted for either party.   Sharing parts which are hidden from the driver is one thing but to start taking shares in each other quite another.

I'm sure a lot of companies would be interested in BMW's engine designs.   They really are a masterclass of power with efficiency.   The Quandt family are right to be worried.

Symanski:

The Quandt family are right to be worried.

I'm not sure either company has the funds to buy out the other, and very few venture capital firms & big investors are going to invest in the motor industry at the moment, so not too much to worry about. Besides, with a 46% share they are close to being able to veto anything anyway by persuading just a small amount of other private shareholders.

Surely it would be easy enough to insert a limiting clause in the deal that bans future share buying over a certain percentage for either company.

Mercedes do need access to a more cost effective way of making small cars like the A & B-Class or they should move out of that market altogether.

There's more going on here that meets the eye but I'm too tired to work out what.  They won't buy shares in each other - don't need to.  From whatever angle I look at this it makes no sense - they are both well underway with replacements for their smaller ranges, maybe Merc engines are a bit shonky but they always were - don't see it - both battered by the lack of credit that's knackered all the luxury brands - Is this about Porsche and VAG in some way? 

This is Daimler's attempt to swallow BMW, just like they swallowed Chrysler (then spit them out).  I am sure Daimler is worried about the Porsche/Audi/VW group (swallowed by Porsche) as Audi is about to takeover (if they have not already) the top sales position of the premium German makes.  Daimler's cars are way overpriced for what you get, but the majority of the cost is labor not parts, just remember what Mercedes did to Wolfgang Bernhard, he was supposed to take over Mercedes, the labor unions balked and he was booted.  Mercedes is not as interested in lowering their costs as they are swallowing BMW to compete with the Porsche/Audi/VW group, as they are challenging Mercedes dominance of the German car industry,  There is more ego involved than anything else, and to think Mercedes sold Audi to VW in the early sixties for practically nothing.

I really doubt both Daimler and BMW want to have their fingers burnt again into mega mergers that turn out to be absolute handfuls of unmanageable behemoths. Remember MG- Land Rover- Rover, the English patient? Remember Chrysler- Dodge-Jeep, anyone?

In the current situation they badly need to get their costs down as, remember, they build their cars mostly in Germany (high labour costs). I don't think there's a lot to worry about brand-character being dilluted at all. They appeal to different audience and could both benefit from each other : Mercedes from BMW's engines and BMW could find economies of scales on buying components. What's the problem using the same brake pads, radiators of air con units? That wouldn't dilute anything at all. Having wheels made in bigger numbers would drop unitary price for both of them, for example. Buying leather, rubber seals or wipers... would nicely add up. A and B class are old and never brought expected returns (crappy overpriced commodities for me) while the Mini is a huge success.

Both are badly suffering at the moment while Audi is faring less badly. Uniting their forces could steer both groups out of the downturn less injured than if they remain on their own.

Not that I am saying "I told you so about BMW" !!! - Daimler have large depth and I could see this working well; Daimler are by far the stronger with good internals and position and the longer BMW take to decide the more Daimler will take as BMW gets much weaker!!

BMW have to do something, they simply cannot go on as they are and I suspect if this does go through then Daimler will take much more; it will be good for BMW for sure and also of course Daimler; it also means that Merc would sit very close to Rolls Royce Aero-engines (I think BMW still have a stake).....it opens up some amazing opportunities.

I will have a think about the branding etc....but I suspect that BMW could become a much higher volume producer with Merc being for the upper end....its got lots of advantages and opportunities.....go Daimler!....there is so much to come out of this!! go on Daimler!

Finally!! Given the customer profiles of the two brands, this merger should produce cars for geriatric merchant bankers.

frankpcb:

just remember what Mercedes did to Wolfgang Bernhard, he was supposed to take over Mercedes, the labor unions balked and he was booted. 

He's back:

http://www.edmunds.com/insideline/do/News/articleId=141828

Putting him in charge of the boring Van division of Mercedes is more of an insult to Bernhardt, he should have stayed at VW.

frankpcb:

he should have stayed at VW.

- he left VW two years ago. Was working as a high power business advisor since. The van division appointment is only a prelude or stepping stone to taking over the reins from his mate Zetsche in a few years at the top.

"while the Mini is a huge success"

Depends if your a marketing man or an accountant