The Big Three had their way for so long and grew so large that they couldn't pull their heads out of their collective asses and see the writing on the wall way back in the '70s when the Japanese invasion really started to make waves. During the two big gas crunches, US automaker saw people buying Datsuns and Toyotas and thought, "Well, people want small cars!" So they turned out cheap, poorly-built rattletraps that were small like the Omni, Escort, and Cavalier (do I really need to bring the Citation into this?) thinking the Buy American mentality would overcome the spotty build quality, cheap materials, and mediocre engineering. Yes, those three named models were eventually perfected as much as possible but by that time had outlived their original design cycle. They "badge engineered" mechanically-identical cars in the name of saving money, but no one can tell a Stratus from a Breeze at 100 yards and how much good did the Cimarron do for Cadillac? The Escort was redesigned as was the Cavalier to some extent (the last Cav still had a lot of '82 in it, though), but all the while the Japanese were progressing. They were selling newer designs that were better engineered and assembled while GM, Ford, and Chrysler were trying to maximize profits selling models based on 15-year-old tooling and letting new, fresh ideas get either killed by committees or focus groups. That obviously wasn't the right approach, since Toyota and Nissan were posting better profits than the American companies. The American companies are overmanaged and run by the bean counters and unions.
During the Lutz era I really thought Chrysler would be the #1 American automaker within a decade--shorter design time, shorter model cycles (the original LH only lived 5 years), and lots of exciting new product both aesthetically and mechanically. In the span of a couple of years we got a new Dodge pickup that wowed the masses, the '93 LH cars, the Neon, and the Viper. Soon after came the "cloud cars", which were also quite good-looking for midsize sedans if not mechanically orgasmic. The Prowler. The PT Cruiser. Chrysler was taking chances and it was paying off... then they seemed to lose sight of the brass ring, and this coincidentally happened around the time Daimler showed up.
Personally, I don't blame the Daimler group for much of anything that happened during their reign. The design department remained essentially unchanged--in fact, Trevor Creed, the man responsible for those exciting designs from the '90s was in charge even after the Germans were gone. So yes--the same man that brought you the at-the-time stunning '93 Intrepid is the same man that foisted the Nitro, Journey and Aspen on the car-buying public.
The only real effect Daimler had on the lineup (other than some delays) was the Crossfire (which was a recycled Benz SLK) and the Sprinter. Yes, they also killed Plymouth but that was probably going to happen anyways since Plymouth hadn't had a distinctive model in years and was down to what--three models at the end (Voyager, Breeze, and Neon)? Other than that, essentially everything Chrysler produced during the Nazi era was already on the table at the time of the takeover. Sure, they robbed a bit of Benz tech to save on tooling costs for various items such as the rear suspension of the LX cars, but that was a wise economic move particularly when you consider the boost in profit margins once the car(s) went on sale and DCX had a hit on their hands. I'd have done the exact same thing were it my company.
Sorry, but the American car companies have done this to themselves. As far as a merger or takeover, I really don't care anymore but if I did I wouldn't get too worked up since GM and Ford had similar talks a few years back. Nothing came of it, and Ford is so badly circling the drain right now they may not be around when the world ends on Dec. 21, 2012.
Corporate stupidity and the UAW sunk the American auto industry... I don't know that it can ever recover.