DaimlerChrysler AG's US-based Chrysler unit plans to use alliances to help double its sales outside its home market during the next five years, after a decline in the US in 2006.
DaimlerChrysler AG said today that it will add a Taiwan-built cargo van in Mexico and will start making Sebring sedans in China for sale in that country. The automaker also cited its agreement last week to have China's Chery Automobile Co. build small cars for sale in North America, Europe and possibly other regions. The focus will be on increasing sales outside North America, now about 200,000 vehicles a year, in part by giving existing vehicles features such as right-hand drive and diesel engines, Chrysler Chief Executive Officer Tom LaSorda said.
Chrysler wants to rely less on the US, where its sales fell 7% last year. The US accounts for about 80% of Chrysler sales. „Their plan is realistic,” said John Novak, an analyst at Morningstar Inc. in Chicago. „I think they are a little late to the game, but they can catch up.” Chrysler is tripling production of right-hand-drive cars and quadrupling its number of vehicles with diesel engines, which are popular in European markets. „The opportunities outside of the North American region are important,” LaSorda said during a conference call. „There is more potential for sales and new partners.” Chrysler's sales outside the US rose 6.6% last year to 555,924 vehicles. The unit's sales decline in the US caused its worldwide total to fall 4.5% to 2.7 million. The US decline also let Toyota Motor Corp. pass Stuttgart, Germany-based DaimlerChrysler as third largest in that market. DaimlerChrysler is the world's fifth-biggest automaker.
The US unit will continue to look for more alliances to get new products into more countries, LaSorda said. He confirmed that Auburn Hills, Michigan-based Chrysler has an agreement in principle with Chery and that the accord must be approved by DaimlerChrysler's supervisory board, which meets this month. The cargo van to be sold in Mexico will be built by China Motor Corp. in Yangmei, Taiwan, and will be sold as a Dodge model, Chrysler said. The Sebring cars to be sold in China will be built in that country starting later this year in Beijing by a joint venture with Beijing Automotive Industry Holding Co.
„This sends a message to the United Auto Workers that there are alternatives out there,” Novak said. „It is a quick and relatively cheap way to tap into these new markets.” In the U.S, Chrysler's sales last year fell to 2.14 million as more buyers reacted to high fuel prices by shifting to cars from pickup trucks, sport-utility vehicles and minivans. Chrysler gets three-fourths of its US sales from those light trucks. Chrysler reported a $1.5 billion loss in the third quarter as its inventory of unsold vehicles in the US surged. DaimlerChrysler's US shares fell 25 cents to $61.78 at 4:18 p.m. in New York Stock Exchange composite trading. They have risen 15% in the past 12 months. (Bloomberg)