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April 21, 2005

USA: DaimlerChrysler talks small car for US with unnamed China companies

This is hardly the news the company’s struggling Brazil plant needs to hear: DaimlerChrysler is reportedly in talks with one of its Chinese partners to build a plant in China in order to export subcompact cars to the United States.

This is hardly the news the company’s struggling Brazil plant needs to hear: DaimlerChrysler is reportedly in talks with one of its Chinese partners to build a plant in China in order to export subcompact cars to the United States.

Dr. Ruediger Grube, the DaimlerChrysler executive president and management board member in charge of corporate development and China operations, told the New York Times (NYT) that while no final decision had been made, he hoped that the details could be worked out in the second half of this year – it would almost certainly be the first mass-produced Chinese car widely sold in America.

Grube’s aides reportedly were surprised that he mentioned the negotiations and said afterward that they had no further information except to say the car would be a small sedan, not a coupe, and roughly the size of the Chevrolet Aveo [which is built for GM US by GM-Daewoo in Korea and about to go into production at a Shanghai-GM plant in China].

Low wages make China a very attractive place to build cars, Grube told the NYT, adding: “China today has a big, big, big advantage as far as labour costs are concerned.”

Noting that the United Automobile Workers union in Detroit has been warning for years that low wages in China would pose a threat to American jobs, the New York Times quoted Grube as saying that Daimler hoped to avoid a political reaction in the United States and any damage to the Chrysler, Dodge and Jeep brands by selling a model not previously sold in America.

Grube reportedly would not provide forecasts of the production schedule, but it would take at least two years to get a plant up and running.

The paper noted that Chinese company Chery Automotive plans to try to set up a distribution network in the United States in 2007, working with Malcolm Bricklin, an entrepreneur who tried to distribute the Yugo, a car from Yugoslavia.

According to the newspaper, Grube declined to say which of its two Chinese partners – Beijing Automotive Industry Holding Company Ltd. and the Fujian Motor Industry Group – was involved in the talks but Daimler is already building Jeeps for the Chinese market with Beijing Automotive and will start making Mercedes C- and E-Class sedans for the local market with Beijing Automotive in October or November at a plant now under construction outside of Beijing.

By contrast, Fujian Motor is Daimler’s partner in making large vans and would appear a less-likely partner for small car production, the New York Times said.

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