Chrysler And The Communists

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Senior management at Chrysler has told The Wall Street Journal that the company plans to "expand outside North America by licensing vehicle production, outsourcing manufacturing and building cars in joint ventures with local partners." The car maker will, of course, start in China.

Chrysler already has a deal with China car company Chery. The vehicles made by the JV are being sent to Latin America. It is possible that customers there don’t know about the problems with Chinese dog food, tires, pharmaceuticals, and toys. But, bring cars made in China into the US and Europe may be more difficult.

Chrysler is also very late to the party in China. The firm wants to have a business there because car sales are rising at 35% year-over-year, but GM (GM) and VW are already the market leaders and Ford (F), Honda (HMC), Toyota (TM), Nissan, and several European car companies are at various stages of setting up manufacturing and marketing facilities. In addition, the local car makers are not likely to willingly give up market share.

There are a number of reasons that Daimler sold Chrysler. It late-in-the-game China plan may be one of them.

Douglas A. McIntyre