Chrysler executives are meeting today with representatives of the Russian vehicle manufacturer GAZ to discuss assembling Chrysler cars in Russia.

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According to the Detroit News, Chrysler president, Tom LaSorda, will meet with GAZ president, Leonid Dolgov at Auburn Hills.


GAZ already buys engines from Chrysler, and last year it bought the former Sebring assembly line and rights to build the car in Russia. The meeting is however, set against a broader background. GAZ already has a presence in North America. In May it acquired a stake in Magna International in May. Magna is Chrysler’s largest supplier.


GAZ has pledged to invest over US$1.25bn in the United States over the next five years. Could it make some of this investment in Chrysler? Both GAZ and Magna had been interested in acquiring Chrysler when it was up for sale.


From Chrysler’s point of view, it is keen to reduce its dependence on the US market. It already has an agreement with Chery Automobile to produce cars in China. Russia is an increasingly attractive market. It is currently growing faster than the Chinese market and this year 2.5m vehicles are expected to be sold. Over 60% of these will be foreign brands. Furthermore the Russian market is highly profitable for foreign brands which set up local production.

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In turn GAZ has some work to do in its domestic market and could do with some help. Foreign brands have been gaining market share at the expense of domestic brands like GAZ. GAZ owns the Volga brand but its share has fallen to nine percent from 13% in 2001.