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Strategies & Market Trends : True face of China -- A Modern Kaleidoscope -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (628)	11/18/2006 11:05:08 AM
From: RealMuLan	Read Replies (1) \| Respond to of 12464

Daimler to Select New Partner in China for Small Cars (Update1) By Eugene Tang bloomberg.com Nov. 18 (Bloomberg) -- DaimlerChrysler AG, the first foreign carmaker to set up manufacturing in China, will select a new partner by year's end to help it make a small car. DaimlerChrysler is in talks with Chery Automobile Co. and another unnamed European carmaker, Tom LaSorda, the chief executive officer of the Chrysler unit told journalists in Beijing. China is the world's fastest-growing major car market and DaimlerChrysler's production in the country is focused on luxury Mercedes-Benz brand sedans and Jeep sport-utility vehicles. The Stuttgart, Germany-based company wants to win more customers who are buying a car for the first time. ``We need a Chinese partner who can help us boost revenue and keep costs under control,'' LaSorda said. ``We have a gap in the B-segment,'' he said, referring to sub-compact cars. DaimlerChrysler opened a new plant with an annual capacity of 105,000 vehicles in Beijing in September. The factory will make as many as 25,000 Mercedes-Benz E-Class and C-Class sedans a year, as well as Chrysler vehicles. China is on course to exceed Japan as the world's second- largest vehicle market this year. The Chinese auto market may expand 10 million units by 2010. Sales in China rose to 5.77 million vehicles in the first 10 months of this year, compared with 4.88 million vehicles in Japan. Chrysler's Loss The company is trying to cut costs at its Chrysler unit, which had a third-quarter operating loss of 1.16 billion euros compared with a year earlier profit of 310 million euros as it built more cars than it could sell. Chrysler's U.S. inventory at the end of October was 509,000 vehicles, LaSorda said, adding the company aimed to reduce inventory to below 500,000 vehicles. DaimlerChrysler will not work with its current partner in China, Beijing Automotive Industry Holding Co. on building small cars because Beijing Automotive doesn't have the engineering capability to design a small car, LaSorda said. The carmaker has held talks with Chery to sell Chinese built sub-compact cars in the U.S., a person familiar with the negotiations said in September. DaimlerChrysler first said last year it may export Chinese-made cars in order to cut its labor costs, as the company then estimated pay for Chinese workers was one-18th those of U.S. workers. Chery, based in eastern China's Wuhu city, is aiming to sell more than 300,000 vehicles this year, exporting 10 percent of its production and selling 281,000 units domestically. The maker of QQ minicars sold a total of 189,400 vehicles last year, including 171,400 units locally. The company plans to eventually export to the U.S. Chery, owned and run by the government of China's Anhui province, has been working with importer Visionary Vehicles LLC of New York to sell models in the U.S. Visionary initially planned to begin sales in 2007 and has since delayed the debut. To contact the reporter on this story: Eugene Tang in Beijing on eugenetang@bloomberg.net Last Updated: November 18, 2006 00:37 EST