Traverse City, Michigan: A year after divorcing from Daimler AG, Chrysler Llc. is actively seeking new—but more limited—alliances with a number of other auto makers, a senior executive said on Wednesday.
The US auto maker has entered partnership talks with auto makers in Russia, China and India and has also been approached by Italy’s Fiat SpA, Chrysler vice-chairman and president Tom LaSorda said. These partnerships will help it expand globally and also survive an expected consolidation of the automotive industry.
“In the next five to 10 years I see more consolidation in every region of the world,” LaSorda told a conference sponsored by the Center for Automotive Research in Traverse City, Michigan. “We should expect to see Chinese auto makers exporting to North America soon, as well as European manufacturers bringing their small cars here to manufacture and sell here as well as export back home to take advantage of the weak dollar.”
LaSorda does not expect Chinese manufacturers to set up plants in the US any time soon, but said they may do so in markets such as India and Russia where tariffs and duties make imports uncompetitive.
While Chrysler is a small auto maker, its wealth of intellectual property in areas such as advanced manufacturing, safety and emissions controls makes it an attractive partner for auto makers in emerging markets, LaSorda said.
Chrysler has “had discussions with multiple companies in Russia” and hopes to seal a deal “by the end of the year”, LaSorda added. The firm has also had discussions with “many companies” in India and held talks with Great Wall Motor Co. Ltd in China.
LaSorda did not discuss whether any of the alliances could lead to a full merger, but Chrysler insiders said this would be unlikely, as the auto maker needs more time to recover from the failed marriage to Daimler. A deeper alliance with Nissan Motor Co. Ltd is possible but unlikely, he said.
Chrysler is not holding “formal discussions” with Fiat, but the Italian auto maker did inquire about the possibility of using some of Chrysler’s excess capacity to re-enter the US market, LaSorda said.
Meanwhile, Chrysler still expects to introduce a vehicle built by China’s Chery Automobile Co. Ltd in Mexico and South America in 2009. “We’re not going to be putting any nameplate on it until we can be rest assured it meets all of our standards,” he said.
Chrysler has also started producing a minivan for Volkswagen AG that will be sold in North America next year. And its partners should not be concerned that these deals will be negated because Chrysler will founder or be sold by its new owner, Cerberus Capital Management Lp., LaSorda said.
“No one is going to buy a car company like this in the market that it’s in and expect ‘Okay, why don’t we see if we can go sell it now after one year,’” he said.
Chrysler recently announced plans to lay off more white-collar workers and slash its production as it struggles against a sharp drop in sales amid high petrol prices, a weakening US economy and stiff competition from Asian competitors.