Monday, January 7, 2008

Chrysler Names Global Alliance Head

Associated Press | By TOM KRISHERDETROIT -

Chrysler LLC on Thursday announced a new executive vice president position to expand alliances with overseas automakers, something that industry analysts say shows a new sense of urgency to find partners outside of North America.

The company named Simon Boag as executive vice president of global alliance operations, reporting to President and Vice Chairman Tom LaSorda.

"Growth in markets outside of North America is critical to the success of Chrysler," LaSorda said in a statement. "We are looking for new alliances and growth opportunities all over the world."

Chrysler has been in talks with Nissan Motor Co. (nasdaq: NSANY - news - people ) about building a vehicle for Chrysler, and it also will build a minivan for Volkswagen AG (other-otc: VLKAF.PK - news - people ). In July, Chrysler announced a deal with China's biggest independent car company, Chery Automobile Co., to jointly produce and export small cars to Western Europe and the United States.

Many analysts have said that Chrysler needs to quickly find a global partner to capture growth in emerging markets and buffer a declining U.S. auto market. Such a partner could take an ownership stake in Chrysler, which last year was uncoupled from Daimler AG after a stormy marriage. In August, Daimler sold an 80.1 percent stake in Chrysler to the private equity firm Cerberus Capital Management LP.

"I think it would be advisable to get a strong partner," said Burnham Securities analyst David Healy, who added that partners could save millions or billions by developing vehicle underpinnings and engines jointly.

Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids, said Chrysler is primarily a North American company with little presence overseas.

"You have to have a position in some of these emerging markets," Merkle said. "Looking 10, 15, 20 years down the road, those markets are going to be substantial."

Merkle said Chrysler must move quickly, but establishing a full-blown alliance with partners exchanging equity stakes and trying to save money through manufacturing, design and management combinations might not work.

"It's really easy to recognize those synergies on paper, but trying to recognize those synergies in the real world is very difficult," Merkle said.

Healy said alliances to design products or engines are more likely for Chrysler than trying to merge management, especially if both companies need the same things.

"Spending the development bucks once rather than twice makes a lot of sense," Healy said.

Chrysler's statement said Boag, who joined the company in April 2005 as vice president of assembly and stamping operations, will lead the operations side of Chrysler's alliances. He also serves as co-chair of Chrysler's efforts to develop electric and other advanced propulsion vehicles.

Company spokesman David Barnas declined to comment beyond the statement.

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