Eh.... I'm not sure I agree with that assessment. I see this as more two separate situations.
The tarnishing of the Mercedes brand had more to do with long-term quality issues. Some would say this had to do with cost-cutting measures and trying to increase sales volume by Mercedes... and this happened LONG before the "merger" was even discussed. Ironically, Mercedes quality has been slowly improving (some places more than others) *since* the merger. But I don't think that was caused any more by the merger than the tarnishing.
As for the part sharing impact in all of this, I know I was very nervous about this when I was awaiting my W208 (CLK) back in 1997. I very nearly cancelled my order upon the annoucement of the agreement to "merge." I didn't, however, and haven't regretted not doing it for one moment. My biggest concerns were over the first two examples of the platform sharing: Crossfire and Pacifica (though I think the 300M is now another big example).
What I have found most striking about these cars is that I can look at them, even sit, ride, and drive in them, and *know* that this or that part is exactly what came from a Mercedes supplier or manufacturing line... but they are decidedly not the same car nor provide the same performance in any respect.
A good friend of mine has owned an R170, a Crossfire (coupe) and now a 300M. Loved her R170 but loathed the Crossfire so much that she chose to drive an old 70's Ford
on long drives to Reno instead of suffering the Crossfire. And while she's very cognizant that the 300M uses the old E-class drivetrain, she actually describes driving it like driving a boat. And I can't think of anyone who ever described driving an E like driving boat.
I'm usually one to hold a very deconstructionist view, but this is one situation -- based on feedback I've heard from actual owners -- where the sum of the parts is not the same. Perhaps you could argue this from a quality standpoint, but most decidedly not from the overall perception and satisfaction of the cars as a whole.
I'm not privvy to any insider knowledge. But nowadays I tend to think the Chrysler deal -- much as I loathe the way they changed the DBAG name -- has been an overall good experience. People joked with me about having a five pointed star on the hood when the deal was announced, but I don't think there has been real brand impact. Meanwhile, I perceive MB quality has improved (on it's own) and Chrysler as a brand has been doing remarkably better than it was at the time it was acquired. I'm not really sure anyone has ultimately lost in this deal.
I kind of chuckled, actually, when I saw BMW advertising trying to capitalize on this... "we're pure and stand alone" (the basic gist). I found myself thinking "gosh, that's sad... maybe your design wouldn't have suffered from Bangle and iDrive so much if you weren't quite so 'pure'"