Chrysler seeks Russian growth

New owner Cerberus was drawn to automaker by its potential for global expansion

Amy Wilson
Automotive News Europe
May 28, 2007 - 1:00 amThe Chrysler group is in negotiations to expand its presence in the fast-growing Russian market.

The company is talking with multiple groups about establishing a partnership in Russia that could include local production, said Michael Manley, executive vice president for international sales, marketing and business development.

Manley would not say who Chrysler is talking to or how soon a deal could be finalized.

Chrysler has a very small piece of the Russian market, but the automaker expects growth would accelerate rapidly if it links with a partner.

"If you look at our global presence, you can see many areas where we see great opportunities, Russia being a very key one for us," Manley said. "It is important that we increase our footprint, not just for distribution, but also production."

Global goals

Global expansion is a major piece of Chrysler's recovery strategy as it prepares to exit its nine-year DaimlerChrysler relationship. DaimlerChrysler announced May 14 that it would sell 80.1 percent of the Chrysler group to private-equity group Cerberus Capital Management.

Chrysler's international growth plans were a major attraction to Cerberus, Manley said.

The automaker strengthened its international team this spring, putting Manley in his job on May 1. It is a new position and the first executive-committee post for Chrysler's international unit.

One of Manley's key responsibilities is to determine how to get enough units from Chrysler's plants – or from partners – to support the sales growth, he said.

Chrysler projects that its international sales will nearly double to 400,000 vehicles by 2012, up from 206,925 in 2006. Manley says Chrysler's international total should eventually surpass that 400,000 target.

"I do not want to put a number on it," he said. "If you just look at the size of the markets internationally and how quickly they are growing, there is plenty of opportunity for us to grow beyond the doubling."

In Europe, Chrysler is targeting sales of around 200,000 by the end of 2009. It sold 107,575 vehicles in Europe in 2006, according to UK-based market researcher JATO Dynamics.

While growing, Russia is a tiny piece of Chrysler's business. Chrysler has no local production in the country.

The automaker sold 4,021 vehicles there in 2006, more than doubling its 2005 mark of 1,722. Sales rose another 93 percent during the first four months of 2007, Chrysler said.

The Dodge Caliber was its best-seller in Russia with 1,066 units sold in 2006.

It was one of 12 Chrysler models that were available in Russia last year.

Chrysler is among a growing number of automakers looking to add or expand production in Russia. Sales of foreign brands in Russia rose 65 percent in 2006 to more than 1 million vehicles, according to the Association of European Businesses in the Russian Federation.

Volkswagen, Toyota and Nissan have announced plans to build in Russia. Ford, Fiat and General Motors are expanding there. Mitsubishi, Hyundai and PSA/Peugeot-Citroen also are exploring Russian production options.