Chrysler appears to be progressing towards a vehicle manufacturing joint venture in India though there have not been any official annoucements.

On Friday, the Economic Times of India (ETI) newspaper reported the US automaker was "understood" to be in advanced talks with Argentum Motors, owned by former local Hyundai head BVR Subbu and the Spice Jet airline's Ajay Singh, for a contract manufacturing alliance.

Sources told the paper Chrysler was interested in contract manufacture of SUV models, like the Jeep Liberty/Cherokee and Grand Cherokee, and some of the Dodge line in India both for sale there and in North America.

Chrysler has previously outsourced production of some export market vehicles to Magna Steyr in Austria (Chrysler-branded minivans; 300C sedan and an export-only wagon version; Grand Cherokee) but has been steadily bringing production back to the US as each model is redesigned.

US-based Chrysler spokesmen did not immediately return calls seeking comment.

Last July, just-auto reported that a recent Tamil Nadu state delegation to the USA had brought the promise of a return visit by a team from Chrysler group though they had not yet visited India at the time.

"The Chrysler group is very interested in our state and we are also very happy to have them here but I cannot say anything more than that at this moment" TN's principal secretary to the ministry of industries, Thiru Farooqui said then.

A Chrysler spokesman in the US told just-auto at the time:  "We have not announced any plans to build a manufacturing plant or any other facility in India."

Today, the ETI noted that Chrysler had been in "precarious financial health" and that its management has eyeing relationships with low-cost manufacturers in both China and India with the resulting JV products giving it both "an emerging market footprint" as well as [cheaper] vehicles to sell in North America.

But Subbu told the ETI only: "Argentum is in talks with several global automotive players. Given the structure of the Indian market, we are in talks with manufacturers who can give us a range of vehicles in the 3.5-4.4m overall length category. Obviously, these would necessarily be budget cars. None of these discussions have reached a final concrete stage yet."

The paper also noted that analysts have said the emerging market push and low-cost sourcing strategy of Chrysler [which already buys some components such as seat frames from India] is crucial for it to turn around.

The automaker has already shown it is eyeing fuel-efficient and frugally manufactured models to improve margins by inking product share/contract manufacturing deals with automakers in China (Great Wall for a small car and Chery for a compact, both to be sold as Dodge models, primarily abroad), Japan and Mexico (Nissan, with whom it will also share one of its own pickup truck designs). There have even been suggestions the alliance with the Japanese automaker could see Chryslers built in other Nissan plants including Sunderland here in England.

Chrysler's private equity owner Cerberus, which took over last year, reportedly has been having problems pumping fresh funds into the loss-making, Detroit-based carmaker for new product development and running costs.

According to the Economic Times of India, Argentum was reportedly earlier in discussions with Mercedes-Benz maker Daimler, too, but those fell through and the German firm subsequently decided to tie up with Hero Motors for an Indian truck JV.

The company, which owns Daewoo Motor India's now-defunct plant in Surajpur, is looking to tie up contract manufacturing deals with top [automakers] looking for a low cost manufacturing base in India, the ETI added.

Sources told the paper that several Chrysler models -  including the large Jeep Grand Cherokee which is sold world-wide - were being tested by Argentum but Subbu refuted that connection and said the vehicles had been imported by Argentum for its own benchmarking purposes.

The ETI also noted Chrysler's existing Indian connection for electric vehicles - Tata Motors has agreed a deal with the US automaker to develop an electric version of the Ace light truck for sale in North America.