Lydia Deininger, a petite brunette, sat in on every high-level meeting at DaimlerChrysler, taking notes, producing documents, even putting a Marlboro cigarette in co-Chief Executive Officer Schrempp’s hand when he waved it in a certain way. Deininger kept Schrempp’s schedule and fielded all his phone calls—when Tom Stallkamp, the No. 2 executive on the Chrysler side, wanted to speak to Schrempp, he called Deininger. Her influence on Schrempp could not be underestimated—and the American executives soon realized that Deininger was far more than Schrempp’s secretary.

Their intimacy made some uncomfortable. Executives at Chrysler’s old headquarters in Auburn Hills, Mich., just weren’t accustomed to a married chief executive openly carrying on a relationship with his attractive female assistant. "It’s odd," Stallkamp said. "Some people say it’s Continental, but it’s not appropriate business behavior."

It was also only the tip of the culture iceberg. The Germans and the Americans simply did business differently.

It didn’t help that there is a six-hour time difference between Michigan and the old Daimler headquarters in Stuttgart. By the time the Americans started their day, the Germans had already had lunch.

Stuttgart always seemed to have a head start on Auburn Hills. While German management board members had executive assistants who prepared detailed position papers on any number of issues, the Americans didn’t have assigned aides. The Americans formulated their decisions by talking directly to engineers or other specialists.

A German decision worked its way through the bureaucracy for final approval at the top. Then it was set in stone. The Americans allowed midlevel employees to proceed on their own initiative, sometimes without waiting for executive-level approval.

Chrysler had a cross-functional structure, in which every senior executive with corporation-wide duties also had operating responsibility for a particular piece of the business. For example, the head of sales and marketing for all of Chrysler also oversaw what the company refers to as the minivan platform. The Germans kept responsibilities clearly separate, operating in what the Americans derisively called "chimneys." Turf was defended aggressively.

The Germans smoked, drank wine with lunch, and worked late hours, sending out for pizza and beer at their desks. The old Chrysler banned smoking and alcohol in its facilities. The Americans worked around the clock on deadlines but didn’t stay late as a routine.

The yawning gap in pay scales fueled the tension. The Americans earned two, three, and, in some cases, four times as much as their German counterparts. But the expenses of U.S. workers were tightly controlled compared with the German system. Daimler-side employees thought nothing of flying to Paris or New York for a half-day meeting, then capping the visit with a fancy dinner and a night in an expensive hotel. The Americans blanched at the extravagance and resisted quick trips overseas simply to meet face-to-face.

To bring the cultures together, executives provided a measure of education and emphasized the need for changes in behavior and a willingness to accept the other side’s cultural biases. The Americans attended classes on German meeting protocol and personal interaction. The Germans took a course on the meaning of sexual harassment in the U.S. work environment. ("A German male should always keep the door open when meeting with an American female," guidelines said.)

German and American teams flew back and forth, huddling on projects to share accounting techniques, computer software, and diesel engines. The Post-Merger Integration team sequestered itself in a windowless fourth-floor office in Auburn Hills, painstakingly reviewing hundreds of practices that could be standardized. The dialogue was constructive as often as frustrating, yet the great divide between the Germans and the Americans seemed as deep as it was wide. They didn’t just make cars differently. They lived in separate worlds.

The sniping started within months of the merger. "You might work late, but you don’t work smart," Tony Cervone, head of Chrysler internal communications, snapped at his counterpart in Stuttgart.

The two communications departments were on the front lines of the culture wars, and the Chrysler side lost nearly every battle. Corporate-wide news releases were written in German and translated into English. The releases went out in the morning, German time. Cervone protested when the decision was made to release year-end earnings at 2 a.m., Detroit time. He wanted the release delayed until the U.S. was awake because it announced the size of American union workers’ profit-sharing checks. "It’s like the universe revolves around Germany," Cervone moaned.

Those on the German side of the communications department said the Americans complained way too much and were obsessed with pay raises and shorter working hours. The Americans couldn’t stomach the Germans’ obsession with image. For instance, German executives wanted any product recall to be associated with only the vehicle brand, such as Dodge or Plymouth, and not the corporate name, DaimlerChrysler. "You can’t say Dodge is recalling cars," Cervone scoffed. "The company is recalling cars."

The Germans didn’t understand that some public relations issues were beyond their control, at least in the U.S. Roland Klein, a German PR executive, went ballistic when a personal-injury lawyer called a news conference to publicize a lawsuit against DaimlerChrysler. "We can’t allow these people to have press conferences!" Klein stormed. The outburst bemused Cervone. "You can’t predict when some dirtbag lawyer is going to call a press conference," he shot back.

The final act of this particular drama occurred when it became clear that Christoph Walther, the top German PR executive, was going to be named to run a DaimlerChrysler-wide PR department. Steve Harris—the top American executive and a cornerstone of the old Chrysler—quit and accepted a small fortune to go to General Motors.

Stallkamp, the No. 2 Chrysler executive, had tried to head off Harris’s departure. He argued that Walther and Harris should share the job, each one running his respective operation. But Schrempp would have none of it. "If there are two people for one job, the better one gets it," he declared. "If the other leaves, let him."

Eaton, Schrempp’s co-chairman, didn’t speak up for Harris. He rarely confronted Schrempp on any other issue, either. When Schrempp made a decision, it was final.

Following the merger, a dynamic had quickly developed on the DaimlerChrysler management board. The meetings were formal and structured. Schrempp stated his positions forcefully and in a way that left little room for debate. Jurgen Hubbert carried elder statesman status among the Germans as the reigning "Mr. Mercedes." Dieter Zetsche, Mercedes-Benz sales czar, spoke incessantly on every topic. Manfred Bischoff, chief executive of Daimler-Benz Aerospace, was clearly the board member closest to Schrempp personally, and he freely offered his opinions.

Among the Americans, Stallkamp did most of the talking, with a couple of others participating intermittently. Eaton primarily listened, speaking up only when a controversy brewed. He seemed passive and distinctly uncomfortable with conflict, particularly if it involved Schrempp. If an issue got contentious, Eaton wanted to move on, get it out of the way. When the allocation of work was discussed, Eaton simply said projects should be allocated down the middle, half on the Chrysler side and half on the Daimler side. But how, Stallkamp pressed, would they do that? What methods would they use? Eaton wouldn’t, or couldn’t, say.

The Americans saw their worst fear become reality. Eaton slowly but surely grew detached and didn’t contribute. He isolated himself in his office for days at a time. He rarely talked to Schrempp, often using others as conduits to his co-chairman. The Chrysler executives thought Eaton appeared intimidated by Schrempp. Their public appearances had taken on a set character. Eaton spoke first, generally on broad topics such as the economy or global consolidation. Schrempp tackled the hard business issues, laying out DaimlerChrysler’s agenda, promising that profits would grow faster than revenue. But more than the substance differed. Schrempp was a natural-born speaker, entertaining and assertive, his confidence palpable in every word. Schrempp didn’t exactly intimidate Eaton. He overwhelmed him. Eaton didn’t cower. He abdicated.

Some of his own executives could not get past the barriers Eaton had erected around himself. Stallkamp hoped the Chrysler side could use Eaton as a "silver bullet," a weapon to be fired only at crucial times to win on an issue. But that couldn’t happen if Eaton wasn’t up to it. The executives in Auburn Hills too often were left to wonder what he was thinking or where he was going. "The merger is his way out," one executive concluded. "He’s just biding his time."

The Germans didn’t know what to make of Eaton. Some cracked jokes about an emotional speech he made at a joint management meeting in Spain, when he had broken down and cried; others ignored him. A few recognized Eaton for what he was: a solid engineer, a low-key manager, and a decent person. But Eaton couldn’t compare with Schrempp. Schrempp had adventure in his veins and an indomitable, competitive spirit.

Still, Schrempp was petrified of being perceived as imposing his will on Eaton or, worse, forcing him out. A full eight months after the merger announcement, Schrempp still had not given a single speech to employees in Auburn Hills. He held back for fear of encroaching on Eaton’s turf. Because Schrempp didn’t show himself to the troops, the rank and file formed opinions of him based on gossip, speculation, and media reports. Oddly enough, Eaton didn’t address his middle managers, either. That was left to Stallkamp. "You do the internal stuff," Eaton told Stallkamp, and he did. Stallkamp held dozens of "town hall" meetings and responded, daily, to e-mail messages from across the Chrysler system.

Stallkamp felt the Americans were totally outmanned and outorganized. Schrempp came to board meetings meticulously briefed and ready to tear through his agenda. The Chrysler side could hardly grasp some of the decisions being made about the nonautomotive parts of the old Daimler. The struggling Adtranz rail-transportation unit was a prime example. Daimler owned Adtranz in partnership with the Swiss ABB Group. Adtranz lost $240 million on revenue of $3.7 billion in 1997 and looked like a chronic drag on DaimlerChrysler earnings. Stallkamp suggested at one board meeting that Adtranz be allowed to go bankrupt. Schrempp shot him an icy stare. "You don’t understand this," Schrempp said. "This is Europe. Bankruptcy is not good over here." Schrempp’s solution? Buy ABB’s 50% share in Adtranz, which DaimlerChrysler did in January for $472 million.

Stallkamp quietly assigned a team of Auburn Hills planners to prepare position papers for the American board members. In the future, if Adtranz or anything else was put on the table, he wanted to be ready for it.

Editor’s Note: After the merger, Stallkamp wrote a letter to Eaton and Schrempp listing all his "personal frustrations" and recommendations for structuring the company. He says he never received a reply. A few months later, in September 1999, it was announced that Stallkamp was retiring at year end. In fact, he was being eased out by Eaton, under pressure from Schrempp.

From the book Taken for a Ride: How Daimler-Benz Drove Off With Chrysler by Bill Vlasic and Bradley A. Stertz. Copyright © 2000 by Bill Vlasic and Bradley A. Stertz. Reprinted by permission of William Morrow & Co., an imprint of HarperCollins Publishers.