Chrysler looks overseas

[nadepalma]

SOURCE: http://www.freep.com/apps/pbcs.dll/a...014/BUSINESS01

TOM WALSH: Chrysler looks overseas
CEO hopes to double foreign sales
January 4, 2007
BY TOM WALSH


Even as he works on a plan to cope with slumping sales and bulging inventories in his home market, Chrysler Group president and CEO Tom LaSorda is expected to report solid gains today in overseas sales of Chrysler, Dodge and Jeep vehicles during 2006.

LaSorda also will announce plans to build the 2007 Chrysler Sebring sedan in China, adding to a DaimlerChrysler portfolio of assembled-in-China vehicles that also will include the Chrysler 300C and Mercedes E-Class sedans, along with minivans and some Jeep models.

Chrysler sold 206,925 cars and trucks outside North America last year, 15% more than in 2005, following a 7.5% gain the previous year. The company has increased its year-over-year sales abroad for 19 consecutive quarters.

Chrysler will further expand its global lineup by selling small subcompact cars to be built by Chinese automaker Chery Automobile Co. but branded with a Chrysler nameplate, probably Dodge. A letter of intent was signed last month; the DaimlerChrysler supervisory board is expected to approve the Chery-Chrysler deal in the next few weeks.

"In the next five years, I want our sales overseas to be double where we are today," LaSorda said in a telephone interview Wednesday.

That's a formidable but necessary task for Chrysler, a wildly erratic performer since the 1998 merger with Daimler-Benz. After showing a $5.4-billion profit in 1999, Chrysler lost $4.7 billion two years later, recovered to post a $1.9-billion operating profit in 2004, but veered to a $1.5-billion third-quarter loss last fall when sales of big trucks and SUVs faltered and inventory levels exploded.

LaSorda sees clearly that most growth in the world auto market is occurring in China and other emerging markets -- not in North America where more than 90% of Chrysler, Dodge and Jeep branded vehicles are sold.

Therefore, Chrysler's brands increasingly will be relegated to second-tier status worldwide and the Chrysler Group fortunes will be more reliant on the ups and downs of the cutthroat U.S. market -- unless the company can grow these brands abroad.

"We were slow building up in China," LaSorda admitted, noting that back in 2000 and 2001 when General Motors Corp. and others were investing heavily in China, "all the money and capital we had was being used to fix up things in our home country."

Now Chrysler aims to double or triple its presence in China, even as it prepares to announce restructuring moves next month to realign its production in North America with shifts in consumer vehicle preference in the United States. Chrysler's total global sales dropped 4.5% to 2.7 million vehicles last year, with a 7% drop in U.S. sales wiping out the gains overseas.

In some cases, LaSorda said, Chrysler can boost international sales without huge capital investments. One example: Chrysler and a joint-venture partner in Taiwan have made Mitsubishi-branded products there in the past, but will soon start making Dodge-branded cargo vans for export from Taiwan to Mexico, where Chrysler has an established dealer base to sell Dodge products.

LaSorda won't discuss how many Chery models Chrysler might sell, or what brand name they will carry, until the DCX board approves the deal. While much of the media attention has focused on when Chinese-made cars might first be exported to the United States, the reality is that most Chery-Chrysler vehicles will be sold in Asian, European and South American markets where demand is much higher for small cars. Conventional wisdom holds that subcompacts can't be built profitably in the United States or Canada, so LaSorda sees the Chery deal as a way for Chrysler to attack emerging markets in a segment where Chrysler currently has no products.

Even with the solid overseas sales gains of the past two years, less than 8% of Chrysler's total worldwide sales are outside the United States, Canada and Mexico. And with nearly all Chrysler Group sales in its home market also built in North America, DaimlerChrysler has a higher percentage of vehicles built in high-cost countries than any other major global automaker.

MORE HERE

[nadepalma]

Chrysler will further expand its global lineup by selling small subcompact cars to be built by Chinese automaker Chery Automobile Co. but branded with a Chrysler nameplate, probably Dodge. A letter of intent was signed last month; the DaimlerChrysler supervisory board is expected to approve the Chery-Chrysler deal in the next few weeks.

..............

LaSorda won't discuss how many Chery models Chrysler might sell, or what brand name they will carry, until the DCX board approves the deal. While much of the media attention has focused on when Chinese-made cars might first be exported to the United States, the reality is that most Chery-Chrysler vehicles will be sold in Asian, European and South American markets where demand is much higher for small cars. Conventional wisdom holds that subcompacts can't be built profitably in the United States or Canada, so LaSorda sees the Chery deal as a way for Chrysler to attack emerging markets in a segment where Chrysler currently has no products.

I thought that this was interesting to b/c it forshadows all kind of stuff without really saying much. It also makes you kinda wonder what the hell they're gonna build with Chery. They've denied over and over again that they're gonna build the Hornet concept with Chery, but now are saying small cars for other markets. What will these be? Some generic vehicles?

I'm interested to see how this will pan out....

[Bggriffi]

They're going to build the E-class in China? Does anyone else see more quality issues in Mercedes' future?

[CrunkedRL]

Originally Posted by nadepalma

LaSorda also will announce plans to build the 2007 Chrysler Sebring sedan in China.

Chrysler will further expand its global lineup by selling small subcompact cars to be built by Chinese automaker Chery Automobile Co. but branded with a Chrysler nameplate, probably Dodge. A letter of intent was signed last month; the DaimlerChrysler supervisory board is expected to approve the Chery-Chrysler deal in the next few weeks.

"We were slow building up in China," LaSorda admitted, noting that back in 2000 and 2001 when General Motors Corp. and others were investing heavily in China, "all the money and capital we had was being used to fix up things in our home country."

I think the Sebring will be highly profitable in China. IMO it's look pretty consistent with some of the other autos produced there currently; conservative, bug eyed, and bland.

DCX is taking a page from GM and allowing Chery to become the emerging markets fighter just as Daewoo has done for GM. This by far was one of the best moves GM has made in recent years. They've already established a notable name in these markets while other companies are trying to gain momentum.

[chevydlrmn]

I wish our market were stronger. Chrysler is very fortunate to have Mercedes to help.

[mkaresh]

Originally Posted by CrunkedRL

I think the Sebring will be highly profitable in China. IMO it's look pretty consistent with some of the other autos produced there currently; conservative, bug eyed, and bland.

Beat me to it with the Sebring looks good for the Chinese market comment. My initial thought was the same.

WRT the Hornet, most likely they've just determined that from a cost/packaging standpoint it's not the best concept for a small car, and are doing a different one.

[Media!]

Lasorda needs to find another job.


I mean other than the 300, what vehicle from chrysler was a smash hit, everthing is simply good or is a dud, nothing really outstanding.


I think restructuring in the management at Chrysler needs to take place.

[throwback]

Originally Posted by Media!

Lasorda needs to find another job.


I mean other than the 300, what vehicle from chrysler was a smash hit, everthing is simply good or is a dud, nothing really outstanding.


I think restructuring in the management at Chrysler needs to take place.

Well the Caliber is selling very well in the USA and Europe. I still think Chrysler, all or part of the company, will be sold. My feeling is Mercedes will keep Chrysler for their entry level luxury cars and sell Dodge and Jeep.

[General STL]

Originally Posted by throwback

Well the Caliber is selling very well in the USA and Europe. I still think Chrysler, all or part of the company, will be sold. My feeling is Mercedes will keep Chrysler for their entry level luxury cars and sell Dodge and Jeep.

Hmmmm......that's an interesting thought. I wonder who would actually buy Dodge and Jeep.

[Bravada]

IMHO Chrysler outdid even the Chinese with how desperately cobbled together the Sebring looks - but I don't think that is what sells vehicles in China... The E-Class will probably be ASSEMBLED in China for the local market only, just like Audis, BMWs and Cadillacs are.

It would have made sense for DCX to reactivate the Plymouth brand for the inexpensive Chinese cars, in order not to risk tarnishing Dodge... if not for the fact that DCX ran down Dodge so much that the Chinese cars might actually boost it's quality levels...

[nadepalma]

Originally Posted by Bravada

IMHO Chrysler outdid even the Chinese with how desperately cobbled together the Sebring looks - but I don't think that is what sells vehicles in China... The E-Class will probably be ASSEMBLED in China for the local market only, just like Audis, BMWs and Cadillacs are.

It would have made sense for DCX to reactivate the Plymouth brand for the inexpensive Chinese cars, in order not to risk tarnishing Dodge... if not for the fact that DCX ran down Dodge so much that the Chinese cars might actually boost it's quality levels...

Either that or revive Eagle as a brand. Either way, it's an interesting thought.

[Bravada]

Well, Eagle was a brand for supposedly "premium" products, not bargain-basement, besides it was an "artificial" brand, I don't think there is much going for that name, contrary to the heritage-rich Plymouth...

[skylark68]

All Eagle was in the past was an AMC product that Chrysler decided to try to expand and turn into a prestige performance brand. The original "Eagle" was a fairly neat little car for the mid '80s. The Eclipse clone (Talon) wasn't.

[Geotpf]

Originally Posted by General STL

Hmmmm......that's an interesting thought. I wonder who would actually buy Dodge and Jeep.

Nobody would, other than maybe a Chinese company wanting an easy way to get into the US market.

[stevecmh]

good to see American brands are making more of a presence over seas.. i hope it keeps up