Wednesday, September 12, 2007

AUTOSHOW-Chrysler eyeing Russian plant possibilities

FRANKFURT, Sept 11 (Reuters) - A top executive at Chrysler LLC said on Tuesday that the U.S. automaker's plans to keep up with growth in the Russian car market will require it to establish a manufacturing presence there within the next two to four years -- possibly in partnership with another company.

"We're talking to some potential partners about that and those conversations are going well," Mike Manley, Chrysler's executive vice president for international sales, marketing and business development, said in an interview at the Frankfurt International Motor Show.

Manley said possible partners include Chery Automobile Co., the Chinese automaker that is already a Chrysler partner, as well as Magna International Inc (Mga.TO: Quote, Profile, Research), the Canadian auto parts maker and vehicle assembler in which Russian billionaire Oleg Deripaska recently took a stake.

"Today in Russia, we import all of our vehicles," Manley said, adding "and we're growing ahead of the market. But as you look out at the next two, three, four years, it's clear that if you're going to continue to grow and continue to be successful, you need to be localised in that region."

Manley said the growth in Russia was especially strong in the smaller car segments, particularly the so-called B segment, where Chrysler is trying to fill a gap in its line-up by a partnership with Chery.

Manley said the company's relationship with Chery "gives us an opportunity to potentially work with them to develop a B segment platform that's suitable. That falls very much into our partnership and alliance strategy. It's one option."

Manley said the maturity of the European market made success in Russia and other emerging auto markets that much more important, as the company tries to make good on its goal of doubling international sales within the next five years. Last year, the company sold 206,000 cars outside North America.

Manley called Deripaska's stake in Magna "an interesting development" and said a partnership with the company was among the possibilities Chrysler was exploring in Russia.

"Clearly, from their perspective they'll be working on what they need to achieve from a company perspective and a strategy perspective. That may open up opportunities for us to work closely together in Russia. It may not," he said.

Chrysler was taken private by Cerberus Capital Management in a $7.4-billion deal that closed in August.

Under Cerberus, Chrysler executives have said the company's priorities as it attempts to return to profitability will be targeting overseas growth and partnerships that allow it to minimize its initial investments.

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