Chrysler may partner with China's Great Wall Motor

The US carmaker said on Thursday that the move was part of its plan to expand its involvement in developing China's car industry and expanding its global business. The two companies gave no other details, pending the approval of "more specific plans."

Chrysler is the smallest of Detroit's three struggling carmakers. It has been scouring the globe for partnerships to complement its shrinking core US business, which is minivans, trucks, and sports utility vehicles. Those have fallen out of favour in the US, where Chrysler's June sales fell by 36 per cent. Great Wall produces SUVs and pick-up trucks, and is moving into cars.

Along with other Chinese carmakers, Great Wall is looking to make its own vehicles more competitive. It has invested heavily in a new plant, and has capacity to produce 400,000 vehicles annually and sold more than 100,000 in China and abroad last year.

Chrysler said it was continuing to talk to "a number of Chinese automakers."

The US company last year signed a strategic co-operation agreement with Chery Automobile to export small cars to North and South America and Western Europe. Chrysler plans to begin sales in Latin America first, but the partnership has faced delays, with both sides saying they needed to improve the cars' quality before launching in the US.

In an interview last month, Tom LaSorda, the company's president, attributed delays in the project to "the speed by which certain regions make decisions" and "bureacracy."

Chrysler sold more than 13,000 imported and locally produced vehicles in China last year. It builds its Chrysler 300 and Sebring models in partnership with Beijing Automotive Industry Holding, and minivans in Fuzhou under licence to South East Motors.

China requires foreign carmakers seeking to produce cars locally to do so with local partners. Chrysler, majority owned by Cerberus, the buy-out group, has no new small cars in its line-up at a time when US consumers are demanding them.

International business currently accounts for fewer than 10 per cent of Chrysler's total sales.

Chrysler announced a deal in April under which Nissan will produce a small Chrysler car in Japan for export in exchange for the US company producing a pick-up truck for it in Mexico.