FRANKFURT, Germany (AP) -- DaimlerChrysler AG, seeking to cut costs and boost sales in North America, said Tuesday it will start selling Chinese-made cars in that market and western Europe as it tries to meet demand for smaller, more economical vehicles.þþThe world's fifth-largest automaker said its supervisory board approved the framework of a limited partnership that will see China's Chery Motor Co. build the cars in China.þþThey will be sold in North America and western Europe under the aegis of its Chrysler Group brands, which include Dodge and Jeep. Financial details were not released.þþ''Small vehicles such as these will allow Chrysler Group brands to compete in segments in which the brands do not currently compete, and which are especially important in price- and fuel-economy sensitive markets,'' the German-U.S. automaker said in a statement after a meeting of its supervisory board.þþThe deal still requires the approval of China's government, a move the company said was likely.þþThere was no word about Chrysler's fate from the supervisory board meeting, only that the company was examining all its choices. Speculation has been rampant since Chairman Dieter Zetsche said Feb. 14 that all options are on the table for the money-losing U.S. business and he would not rule out a possible sale.þþDaimlerChrysler said the Chery deal is expected to help it become a ''bigger player on the global automotive stage by giving it access to products in new segments more quickly, with less capital spending.''þþIn December, the company and Chery agreed on a plan for the Chinese car maker to build small cars that would be sold globally and be based on an existing model that would be modified jointly by Chrysler and Chery engineers.þþThe move gives Chrysler a relatively quick entry into a growing segment of the car market where it now has no significant product, and it prepares the company in case gasoline prices escalate to above $3 per gallon in the U.S.þþA government report released Tuesday said gasoline prices averaged about $2.38 a gallon in the United States last week.þþChrysler has sought a Chinese partner to build small cars, saying it cannot make money by manufacturing them in the United States due to high labor and other costs.þþBig name automakers have set their sights on China and other fast-growing developing markets to help offset legacy costs and provide sales growth missing in the U.S. and other Western markets.þþSo far, domestic and foreign manufacturers have focused mainly on meeting soaring demand inside China. At the same time, though, Chinese automakers have begun looking overseas for acquisitions, both to expand their market reach and to tap advanced technology and design capacity.þþChery is China's biggest domestic automaker, with 272,400 vehicles sold last year, but it trails General Motors Corp., which sold 876,747 vehicles last year, as the country's biggest automaker.þþBased in the southeastern province of Zhejian, south of Shanghai, Chery already assembles vehicles abroad in facilities run with local partners in Iran, Malaysia, Russia, Ukraine, Brazil and Egypt.þþShares of DaimlerChrysler fell 2.2 percent to 52.48 euros ($69.06) in Frankfurt.þþ
Source: NY Times
