Chrysler confirms 2-tier strategy for Chery vehicles

Rick Kranz
Automotive News
July 2, 2007 - 12:01 am

CHELSEA, Mich. -- Nissan's Carlos Ghosn talks about a $3,000 car.

But the best Chrysler can hope for from China's Chery Automobile Co. is a car that might sell for around twice that price.

Three thousand "is pretty low," said Frank Klegon, Chrysler's executive vice president of product development. "I don't know if I can get a $3,000 or $4,000 car out of China. Maybe, $5,000 or $6,000."

During an interview at a press event here last month, Klegon acknowledged what sources outside the company had been saying for months - that Chrysler is developing a two-tier vehicle strategy with its Chinese partner:

1. Low-tech, low-cost vehicles for such regions as Central and South America.

2. More premium vehicles for the United States, Canada and western Europe.

But while Chrysler expects to sell Chery-assembled vehicles before the end of the decade, the two automakers have yet to sign a contract, he said.

Chery halted negotiations when DaimlerChrysler announced in February that it was seeking a buyer for Chrysler. Cerberus Capital Management LP announced in May that it planned to purchase 80.1 percent of the Chrysler group.

"It is pretty much straightened out," Klegon said. Chrysler and Chery "are on a timetable for signatures, (but) we haven't signed all the stuff yet."

Klegon said Chrysler wants to market low-cost vehicles in South America, Latin America and other regions where emission and safety regulations are less strict. Still to be decided is whether the vehicles will be badged for Chrysler or Dodge.

"Over time, it could be both brands," Klegon said.

Klegon said a vehicle for the United States, Canada and western Europe will take longer to develop. Customers there demand a higher level of refinement and performance than customers in Central or South America who are motivated by price, he said. A time frame was not offered.

Last month, Ghosn told reporters after Nissan's annual meeting in Japan that Nissan and Renault are working on a $3,000 car for India's booming market.

Klegon said that hitting that price may depend on how "car" is defined.

He said that in India, "I have seen what you and I wouldn't necessarily call cars. They are three-wheel-scooter kinds of cars. They get people around, but they would be a little different than what you and I would consider when we first think what is a stripped-out car."

This Day in Auto History: 7.2.1904 Buick, Studebaker, and Worthington join the ALAM to comply with Selden patent rights 7.2.1912 William LeRoy Mitchell of General Motors is born in Cleveland, OH 7.2.1928 Chrysler Corporation acquires Dodge Brothers, Inc. and establishes the Dodge Brothers Corporation as a subsidiary 7.2.1935 Ab Jenkins, driving the Duesenberg Special at the Bonneville Salt Flats, UT, sets a Class B super-stock record for the flying mile of 145.44 mph 7.2.1954 Charles S. Davis, Chairman of the Board of the Borg-Warner Corporation and its former President, dies in Paris, France at age 77

Source: Automobile History Day By Day, by Douglas A. Wick

Report: Smart cost DaimlerChrysler 3.9 billion euros over four years -Bigger loser than Chrysler

Without the burden of the Smart brand, the Mercedes group would have achieved a record operating profit of more than 4 billion euros last year.

Report: Smart cost DaimlerChrysler 3.9 billion euros over four years

Automotive News Europe
June 12, 2007DaimlerChrysler’s Smart brand lost nearly 3.9 billion euros, or $5.21 billion at current exchange rates, between 2003 and 2006, German newspaper Handelsblatt reported today.

The newspaper cited documents it obtained from the liquidated Smart GmbH in Böblingen, Germany, as the source for financial information. DaimlerChrysler has not disclosed profit or loss details for brands within the Mercedes Car group.

Without the burden of the Smart brand, the Mercedes group would have achieved a record operating profit of more than 4 billion euros last year, or $5.34 billion at current exchange rates. Instead, the group posted a 2.4 billion euros, or $3.20 billion, operating profit.

DaimlerChrysler has said that restructuring of the Smart cost 1.2 billion euros in 2005. Experts have speculated that the brand was hit with heavy losses, though.

A DaimlerChrysler spokesman did not comment when asked about the report, according to a German press agency report. But the spokesman emphasized that the Smart brand will be profitable for the first time this year.

This Day in Auto History: 7.1.1892 Automobile parts manufacturer John Aaron Grass is born in York, PA 7.1.1901 William King White, son of Rollin H. White and himself an official in the White Motor Company, is born in Cleveland, OH 7.1.1908 Pliny Fisk Olds, father and first business partner of Ransom E. Olds, dies in Lansing, MI at age 80 7.1.1914 Dodge Brothers, Inc. is incorporated to manufacture Dodge Brothers automobiles 7.1.1917 The 1918 Dodges are introduced

Source: Automobile History Day By Day, by Douglas A. Wick

DaimlerChrysler financial US arm to shift some staff to new site

Automotive News Europe Reuters) -- DaimlerChrysler Financial Services Americas said its corporate staff supporting Mercedes-Benz Financial and DaimlerChrysler Truck Financial will move to a new location in Oakland County, Michigan.

The company, which said the move will occur after it transfers assets of its Chrysler Financial business unit to Cerberus Capital Management in the third quarter, also said that its headquarters will remain at its present location, Metro Detroit.

DaimlerChrysler Financial Services is the finance arm for DaimlerChrysler products, which operates autonomously within DaimlerChrysler.

DaimlerChrysler delays second quarter results

Reuters |FRANKFURT (Reuters) -- DaimlerChrysler will postpone until Aug. 29 its full second-quarter results, which were originally due on July 26, the world's fifth-biggest carmaker said today.

It cited the complexity arising from its sale of a majority stake in the Chrysler group to Cerberus Capital Management as the reason for the delay.

Headline numbers for other group divisions will be announced on July 25, the company said in a statement.

"Chrysler Automotive and Chrysler Financial will be shown in the Q2 financial statements as 'discontinued operations'. For this reason, it will not be possible to publish the full interim report as planned on July 26," it said.

"It will not be possible to report Financial Services' figures separately for Chrysler and Daimler on July 25, because the accounting work of separating the business volume of Financial Services that is to be allocated to the Chrysler Group will not have been completed by then," it added.

The company will release preliminary figures for unit sales, revenues, and earnings before interest and taxes for the Mercedes Car Group and Truck Group divisions as well as for the Van, Bus, Other segment on July 25.

Oregon state appeals Freightliner fraud settlement

Reuters |PORTLAND, Ore. (Reuters) -- Oregon is appealing a $500 million fraud settlement between truck maker Freightliner, its parent DaimlerChrysler and MAN AG because it excludes punitive damages in which the state would have a stake.

The Oregon Department of Justice filed its appeal in the Multnomah County Circuit Court on June 15, state solicitor general Mary Williams said on Thursday, June 28.

In December, the court ordered Portland-based Freightliner to pay MAN at least $488 million and, with DaimlerChrysler, an additional $350 million in punitive damages -- an amount believed to be the largest such award ever in Oregon.

But the parties struck a new deal in late May that excluded punitive damages, and Judge Kathleen Dailey approved that deal on June 7.

Oregon law directs 60 percent of any punitive damages awarded in the state to victims services programs. Williams put the state's share of the original judgment at $210 million.

"We do have an interest in these punitive damages," she told Reuters. "You cannot simply exclude the state in the settlement negotiations."

Freightliner, which makes heavy trucks, had no spokesman immediately available for comment.

The convoluted case goes back to suspected accounting fraud in the 1990s at UK truck manufacturer ERF, which was bought by Germany's MAN in March 2000 from Western Star Holdings Ltd., a Canadian truck maker. Western Star was in turn bought by Freightliner in late 2000.