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Chrysler Exec Predicts Big Jump In China Sales

Automaker hopes foray into China's small-car market will more than double sales to around 20,000 vehicles this year from fewer than 8,000 units last year.

BEIJING (Dow Jones/AP) — Chrysler Group is looking to enter China's huge market for small and compact cars and expand sales of existing brands, a top executive in charge of Chrysler's China sales said in an interview with Dow Jones Newswires Friday.
Simon Elliott, president and chief executive officer of Chrysler Group China Sales Ltd., forecast Chrysler's sales in China will more than double to around 20,000 vehicles this year from fewer than 8,000 units last year, boosted by sales of a few popular new models.
Meanwhile, he said, ''We are looking at new opportunities in the segments we don't cover today. ... The small car and compact car segments, two of the biggest segments in China, will be very much under our spotlight.
''Chrysler doesn't have a small car with a small engine. We have to find somebody that does, (and) make sure the quality and pricing are right,'' Elliott said.
Small cars are increasingly popular in China. According to data from Automotive Resources Asia Ltd., a division of J.D. Power and Associates, sales of subcompact cars in China jumped 46 percent from the previous year to 118 million units during the January-to-August period, accounting for a 35.3 percent market share in the entire local auto industry.
At the same time, compact car sales surged 35 percent from the previous year to 607,591 units during the eight-month period, taking a 18.2 percent share of the overall market.
Sales for the industry as a whole rose only 27 percent in the same period.
Elliot didn't name potential partners Friday, but said Chrysler ''at the moment'' has no plan to make small or compact cars for China with Chery Automobile Co. The two companies previously agreed to manufacture small cars for exporting to markets outside China.
''Whether we'll be talking to people or maximize our relationships we have today, only time will tell,'' he said.
The plan to explore China's small-car business may accelerate with the arrival of Phil Murtaugh, the former General Motors Corp. China CEO who was recently hired as Chrysler Asia chief, Elliott said.
''I know very well he is very keen to look at the market potential that we are not looking at today,'' he said.
Murtaugh, a 32-year GM veteran, is well-known for successfully forging GM's China business through the establishment of a joint venture with Shanghai-based SAIC Motor Corp.
While DaimlerChrysler AG set up China's first-ever Sino-foreign auto joint venture as early as 1983, the effort initially focused on making Jeeps and only began local production of Chrysler 300C units last year.
Elliott acknowledged Chrysler is a bit late in coming to the world's second-largest auto market, where annual vehicle sales likely will reach nearly 9 million units this year. But he said Chrysler is aiming to expand aggressively by spending more on marketing, launching new models to fit the market and improving the quality of its local sales network.
The venture with municipal government-owned Beijing Automotive Industry Holding Co., called Beijing Benz-DaimlerChrysler Automotive Co., or BBDC, has stepped up efforts to launch more products, Elliott said. Chrysler is scheduled to launch its first locally made Dodge Caravan minivan off the production line at BBDC on Nov. 1, he said.
To leverage China's low cost advantages, Chrysler aims to ''dramatically'' increase the proportion of local sourcing of auto parts from the current range of 40 percent to 50 percent, Elliott said. The company aims to more than double the number of local purchasing staff in the next few years from around 50 people now.
Meanwhile, Chrysler plans to expand the number of dealerships of Chrysler and Jeep brands to 116 by the end of this year from the current 81 and open 60 Dodge dealerships by year-end, he said.
Chrysler China is undergoing a transition after Chrysler was separated from DaimlerChrysler AG earlier this year, Elliott said.
The group, along with Daimler, their local partner Beijing Automotive Industry Holding Co. and various Chinese government departments, is negotiating the future of the joint venture, he said.
Asked whether BBDC will be split or restructured, Elliott said a number of options are being discussed but a decision won't likely be reached this year.