German-US carmaker DaimlerChrysler AG says it is cutting production of U.S.-made vehicles so it can focus on producing smaller, more fuel-efficient cars in China. The company is reportedly in talks with potential Chinese partners to produce lower-cost automobiles for the U.S. market.
DaimlerChrysler has joined the rush of foreign automakers for a share of the booming Chinese market.
This month, the German-based automaker formally opened its new plant in Beijing -- complete with traditional pomp and fireworks. Chairman Dieter Zetsche says it's all part of the company's $1.9 billion investment in China.
"This, obviously as everybody knows, is one of the most dynamic if not the most dynamic countries and economies on the face of the earth,” said the chairman. “And DaimlerChrysler, we are very proud to play a role in contributing to China's economic growth and development."
China is the world's second-largest car market after the United States, with seven million new vehicle sales a year. The company is said to be in talks with a state-owned company to sell Chinese-built subcompact cars in the U.S. and Europe.
Chrysler Group Chairman Tom Lasorda says the company plans to introduce 10 new models this year. "Bottom line, we need to partner with someone who has low cost, high quality. We can't rule out China and we can not rule out European markets or other parts of Asia because there are a lot of key players in the "B" segment today and we are going to look at all of them."
Unlike other automakers that have produced specially designed cars targeted for a Chinese market, Dieter Zetsche said Mercedes and Chrysler models made in China will be identical to models sold abroad.
"The only difference ought to be the country of origin. As far as quality is concerned, there can only be one quality we are striving for with Mercedes or with Chrysler products around the globe."
The company plans to reduce dealer shipments in the U.S. by 15 percent because of declining sales of pick-up trucks and sport utility vehicles.
Although DaimlerChrysler claims its international operations have been profitable, its U.S. sales are down about 10 percent this year resulting in a projected loss of $1.5 billion in the third quarter.