Chrysler says it will be sticking with joint venture

CHRYSLER LLC said it has no plans to quit its Chinese venture with Daimler AG, the Beijing Benz Daimler Chrysler Automotive Co Ltd, as it looks to speed up its development in the world's second largest car market and catch up with rivals.

"The BBDC remains exactly as it was before the separation of Chrysler and Daimler," said Philip F. Murtaugh, chief executive officer of Chrysler's Asian operations.

"This company is critical for Chrysler's success and these cars are very large and important segments in China's market. Chrysler and BBDC are working closely and hard together to make sure we will succeed."

There had been reports that the United States' third largest car maker was to withdraw from the joint venture not only because the relationship in the venture after the separation with Daimler had changed last year, but also because of a limited capacity for production that failed to support its expansion in China.

BBDC was founded in 2004 by Daimler Chrysler and the Beijing Automotive Industry Co. It now produces Mercedes-Benz E-class and C-class luxury sedans as well as Chrysler 300C and Chrysler Borui sedans under technical licensing contracts.

Lagging behind

The technical license contracts will run for six years until 2013.

Chrysler, a late market player, is lagging behind its rivals, such as General Motors, Volkswagen and Toyota, in China's rapidly expanding vehicle market, which plays an important role in turning around declining global sales hurt by surging fuel prices.

Last year, Chrysler accelerated the launch of new models to tap into various market segments including imported Jeep models.

It also started to produce Chrysler Sebrings, or Boruis in BBDC locally as well as Dodge Caravans and Chrysler Grand Voyagers in a joint venture with the Fujian Automotive Industry Corp.

"And to really take advantage of the size of the market (in China), we have to continue to fill our portfolio," said Michael Manley, Chrysler's executive vice president for international sales.

The car maker combined the sales networks of its three brands including Jeep, Chrysler and Dodge, to help attract dealers with a broader product mix.

Chrysler is also reported to be forming a joint venture with China's Chery Automotive Co Ltd to enhance its development in the small car market after agreeing to source engines from Chery. No details have been announced yet.

Manley said the company is still talking with Chery to ensure that the new models will be competitive and that they will be able to meet safety and design requirements when they are launched.