Chinese partner for Dodge?

[Plex]

The chief executive officer of the Chrysler Group hinted on Monday that DaimlerChrysler was nearing a deal to distribute Chinese-made automobiles in the United States.

German magazine Der Spiegel reported over the weekend that DaimlerChrysler is in talks with China's Chery Motors about licensing its small, fuel-efficient cars for sale under the Dodge brand.

When asked to respond to the report, Chrysler chief Tom LaSorda would neither confirm not deny the talks. He did say that the automaker had been in discussions with car makers in Europe and Asia to import a low-cost vehicle and described a potential alliance that would best fit Chery.

"We've said before that the Chrysler Group would enter the subcompact segment if we could develop a profitable business case," LaSorda told reporters.

Any partner, however, will have to be willing to invest a significant amount of capital in the project, he said.

"The only way the Chrysler Group can make a business case for a low-margin subcompact is through a partnership which allows us to reduce capital investment, bring product to market faster and meet low-cost and high-quality targets," he said.

Wuhu, China-based Chery has been aiming to enter the massive and highly competitive US market with small, fuel-efficient cars priced 30 to 40 percent below current offerings. Analysts have warned that US consumers would be wary of buying Chinese-made vehicles because of quality concerns.

Chrysler recently said it expects to post a $1.5-billion loss and to dramatically slash production because of a sharp drop-off in demand for gasoline-guzzling trucks and sport-utility vehicles.

LaSorda also said the Chrysler Group's future success depends upon increasing sales in China and other parts of the world.

"As part of our China growth plan to increase local production in the region, DaimlerChrysler and our partners will increase the amount of local sourcing in China by more than eight-fold in the next two years," he said. By 2007, international sales will account for more than nine percent of Chrysler Group's total sales, compared to six percent in 2000, said LaSorda, noting that eight of Chrysler's 10 new products this year are scheduled for international sales.

Chrysler Group registrations in Western Europe increased 35.6 percent in August and are up 15.5 percent for the year, making Chrysler the second fastest growing group in Europe, trailing only resurgent Fiat.

Sales in Latin America increased 47 percent and sales in South Africa rose 34 percent, LaSorda added.

Source: http://motoring.iafrica.com/newsbriefs/211666.htm