Daimler in talks on China export plant

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SHANGHAI: DaimlerChrysler, the world's fifth biggest carmaker, is in talks to set up a China production venture to export Chrysler cars to the United States, and will decide whether to make that investment in the second half.

DaimlerChrysler was in discussions with an existing Chinese partner, said Ruediger Grube, the head of the carmaker's China operations, yesterday.

If Daimler and the unspecified partner decide to go ahead, the vehicle maker would be one of the first foreign players to operate export-oriented factories in China.

?We would like to establish here in China an export joint venture for Chrysler products,? Grube told reporters on the sidelines of the Shanghai auto show. ?We're not talking about current products; we are talking about a totally new segment.?

?Today, we are not talking about Europe, we are talking about North America,? he added.

Global carmakers worry that cheap made-in-China cars would someday swamp markets, especially with vehicle sales growth decelerating in the Asian country and Beijing persisting in trying to curb easy motor vehicle loans.

Washington has protested loudly that Chinese-made goods are artificially cheap because of an overvalued yuan currency, a situation that threatens American industry and millions of jobs.

Asked about a potential political backlash, Grube said: ?We're not talking about current products, we are talking about a totally new segment.?

Grube added that Daimler would make small passenger cars in China, if the Chrysler venture were to go ahead.

DaimlerChrysler is expected to invest some 1.2 billion euros (US$1.6bil) over the medium term in China. Any investment in a Chrysler export venture would be a fresh investment and not part of that amount.

The German-American group undershot its China target last year amid Beijing's steps to cool demand, but sales ? including imports and local production with venture partners ? still rose by about a third to 44,900 units.

DaimlerChrysler's sales of premium Mercedes-Benz vehicles climbed just 3% in China in the first quarter, while Chrysler sales shot up 46%, Grube said.

Daimler's current and prospective partners include Beijing Automotive Industry Holding Co, Fujian Motor Industry Group and China Motor Corp.

It also has agreed to establish a venture with Beiqi Foton to make heavy and medium trucks, engines and parts for the domestic market. ? Reuters


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