Decision on Dodge small car will come in the fallVW, Chery among potential partners for entry-level model

Harald Hamprecht Automobilwoche / August 1, 2006 - 6:00 am LONDON -- The Chrysler group is giving itself more time to find a partner for a new entry-level model for its Dodge division."

At the start of the fourth quarter, at the latest, we will announce who we will build the new Dodge model with," Chrysler CEO Tom LaSorda told Automobilwoche, a sister publication of Automotive News.

Frank Klegon, Chrysler's development chief, announced in January that the decision would be made in the first half of this year.

Besides Volkswagen AG, Hyundai Motor Co. and Mitsubishi Motor Corp., Chrysler is also talking "with yet another European (manufacturer) as well as a Chinese manufacturer," LaSorda said. Discussions with a Chinese manufacturer involve Chery, industry sources said.

LaSorda said he had no quality concerns about working with the Chinese. A decision in Chery's favor would be a setback for VW, since the German automaker would be able to build a five-door, front-wheel-drive car on the same platform as the next Polo, thereby reducing costs.

By producing a new small car, Chrysler is responding to the trend toward small, fuel-efficient cars. The Dodge vehicle may bear the name Hornet. "We will also sell this model in Europe," LaSorda said.In contrast, Chrysler sees "insufficient demand" for sporty cars such as the Dodge Challenger and Charger in Europe, said Joe Eberhardt, the Chrysler group's sales and marketing chief.

Moreover, Chrysler "doesn't want to unnecessarily distract" dealers, he said. "We have to cut back on the pace of our new introductions, since our sales training and showroom capacities are limited."Due to increased competition in the United States, the Chrysler group is intensifying its international expansion. Eight new Chrysler, Jeep and Dodge models are arriving in European dealerships in the second half of this year.

Chrysler group sales outside the United States are expected to climb from 185,000 units to more than 200,000 units in 2006. They are expected to reach 340,000 units by 2009. At that point, Chrysler's market share in Europe is expected to have doubled to 1.4 percent.So far, 60 percent of the 970 Chrysler and Jeep outlets in Europe have picked up the Dodge brand, which was introduced in June.Compared to the corresponding period last year, the profit margin for European dealers has doubled over the first six months of 2006 to 1.0 percent."In the middle term, I see it at 1.5 percent here," Eberhardt said.