Friday, February 23, 2007

GM and Chrysler eye partnership

Friday, February 16, 2007
GM and Chrysler eye partnership
If firms reach deal on making large SUV together, it would be first for U.S. automakers.
Josee Valcourt / The Detroit News

The Chrysler Group is in talks with crosstown competitor General Motors Corp. to jointly produce vehicles, including a large SUV similar in size to the Chevrolet Tahoe.

The maker of Dodge, Chrysler and Jeep cars and trucks has been in talks with GM for more than six months, said a person familiar with the plans, which have been described as advanced but not final.

"It's an example of a strategic partnership," the person said.

More strategic partnerships and joint projects were key ingredients in the restructuring plan that Chrysler CEO Tom LaSorda detailed on Wednesday in response to the automaker's $1.5 loss in 2006.

The Auburn Hills automaker is cutting production and 13,000 jobs.

If a deal is struck between Chrysler and GM, it would be the first joint effort between domestic automakers to build vehicles. There have been alliances with foreign makers. Ford Motor Co. once built Nissan Quest minivans for the Japanese automaker and Chrysler plans to build Volkswagen AG minivans at its plants.

GM and Chrysler also are exploring sharing small cars developed by GM's South Korea-based unit, GM Daewoo Auto & Technology, according to a report by the Wall Street Journal.

A GM spokesman wouldn't confirm Thursday any plans with Chrysler.

"We frequently discuss issues of mutual interest with other companies," GM spokesman Tom Wikinson said. "In many cases these discussions don't lead anywhere."

Though such collaborations help cut development and manufacturing costs, Chrysler's latest endeavor to add a large SUV to its truck-heavy lineup puzzled some analysts.

"I think it's crazy," said Erich Merkle, an analyst with Grand Rapids-based IRN Inc. "The reason why I say that is I don't have a problem with them maybe collaborating on a vehicle or maybe trying to combine some of their product developing resources to work on a common vehicle or common technology, but why a Suburban-type vehicle?

"Those vehicles have been so hard-hit. That's not exactly what the market is clamoring for."

Chrysler doesn't have a SUV in its lineup the size of a Chevrolet Tahoe or Suburban.

"It's missing, but is it necessary in today's auto environment," questioned Jeff Schuster, global forecasting analyst for Westlake Village, Calif.-based J.D. Power and Associates, which has an office in Troy.

Chrysler is in a joint venture with GM and luxury carmaker BMW to produce hybrid technology for the three companies. Chrysler also has a tentative deal with Chery Automobile Co. of China to build subcompact cars in China and sell them in North America and Europe.

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