Tuesday, January 15, 2008

Chrysler pursues new global partners

Firm wants to double international sales

Chrysler LLC, the least-global of Detroit's automakers, is pursuing a variety of efforts toward its goal of doubling its overseas sales in just four years.

The automaker sold 238,218 vehicles overseas in 2007, up 15% from 2006. In the United States, Chrysler sold about 2.1 million vehicles.To realign itself as a global business, the Auburn Hills automaker is trying to add dealers in Russia and South America while pursuing partners in Asia.

"To me, success is making sure that we continue to put the right foundations into our business. In some markets it will take longer for us to grow just because of the very nature of the market," Mike Manley, a Chrysler executive vice president in charge of international sales and business development, told the Free Press Monday during the North American International Auto Show in Detroit.

This year alone, Manley said, he wants to double the number of Chrysler dealers in Russia. "We need to increase our dealers in Russia certainly over the next 12 to 24 months," Manley said.

The company currently has about 23 dealers, one of which recently opened a $23-million facility in Moscow, he said.

But it's not just Russia where Manley and other Chrysler executives are pushing.

"To some extent, China is more complicated because it's today an absolute requirement ... to have product localized and obviously there is a process to get that done and it's very complicated," Manley said. "But in terms of Russia, you can still import product and you can still take advantage of the growing market, but you certainly do want to be localized in, let's say, the near or to long-term future because localization will drive some of the cost competitiveness in the region."

At this point, Chrysler seems to be creating a mosaic of partnerships to help build its global business.

The recently announced deal with Nissan Motor Co., for the Japanese company to make a small car for Chrysler to sell in Brazil and possibly elsewhere in Latin American beginning in 2009, helps Chrysler in its efforts to expand its dealership network in South America, Manley said.

"The biggest challenge for me in Latin America is building the dealer network," he said. "Part of that is to make sure we can continue to fuel our growth. I've got to be able to offer our dealers a good business plan. I've now got one more product that's very relevant to them that I can offer to them as long as they make the right investment in our franchise."

The automaker also has a deal with Chery Automobile Co. for the Chinese company to make small cars for Chrysler to sell in various regions around the world.

One of the reasons given for the Chrysler-Daimler merger nearly 10 years ago was to help Chrysler become more global. Though some say newly independent Chrysler needs a major partner, executives indicate that's not their plan.

"I am not spending any time on something bigger than project-by-project," Tom LaSorda, a Chrysler president and vice chairman who is responsible for developing global partnerships, said Monday.

He also said, "Relationships take a while to blossom and flourish. So we'll see. I am not saying that's the last one with Nissan nor am I saying what are the others. If there is win-win, and there is open dialogue, who knows?"

While not speaking specifically about Chery, Philip Murtaugh, Chrysler's chief executive officer of Asia operations, said he does not expect a Chinese company to begin selling cars in the United States before 2010.

"I think 2010-12 is a realistic forecast of when any Chinese manufacture can be capable of coming to the U.S. in any reasonable manner. I think our relationship with Chery will be beneficial for both companies," he said.

Murtaugh said Chrysler continues to look for other relationships in Asia. He sees opportunity not only in China and India but the southeast region of Asia, known as ASEAN, which includes Thailand, the Philippines, Indonesia, Malaysia and others.

"They are not all that big ... but when you put them together, that's a free-trade region. To build a factory in the Philippines, you can sell in every ASEAN country duty-free. As a free-trade zone that now is an extremely good and important region. It is just as important as China, India and Russia," Murtaugh said.

Chrysler is open to having talks with Chery to partner with the Chinese company to sell vehicles in China, LaSorda said. "Would we talk to them about China operations? Yes. But specifically right now, it's about export," he said Monday at the Detroit auto show.

No comments: