Chinese carmakers are bound to follow their Asian counterparts from Japan and Korea and enter the already fiercely competitive US market, Chrysler chief Dieter Zetsche told Reuters.

"You don't need to be clairvoyant to see the Chinese in this position," he reportedly said.

Zetsche said excess supply of three million cars per year - two thirds of them imports - was exerting severe price pressure in the US market, which he called "the battlefield of the automobile industry".

He acknowledged that Chrysler's strategy of reducing margin-eroding price incentives had met with mixed results because customers had got used to paying below list prices, Reuters said. The company had tried to reduce both the list price and the incentives on its Dodge Durango SUV, for instance, but was forced to reverse course given rebates of up to $US7,000 per vehicle from rivals Ford and General Motors. But the company had more success with a new minivan that competes against Japanese models.

"The Japanese act the way we want to act," Zetsche told Reuter. "We have the goal of keeping the difference between list price and selling price as small as possible."

The report noted that Chrysler has emerged as one of the group's star performers this year thanks to a series of hit models [such as theChrysler 300C sedan] that have pushed it firmly into profit at a time of faltering earnings at the company's flagship premium vehicle business, the Mercedes Car Group.

Zetsche reportedly said sharing parts between Chrysler and Mercedes to save money was no taboo as long as it did not dilute brand value. Keeping visible parts separate was critical, he added.

The Chrysler 300, which shares around a fifth of its parts with Mercedes, was a good example of how this cooperation could work, he said, according to Reuters.

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