DCX project for small car turns to Asia -- VW out

Dodge wants a small car for the United States, similar to this Hornet concept shown in March at the Geneva auto show. Chrysler is expected to announce a partner for the project before year end.

Harald Hamprecht | Jason Stein | Automotive News / September 18, 2006 - 6:00 am
DaimlerChrysler AG is focusing on Asian manufacturers in its search for a partner to help produce a small car for the United States.

One potential partner, Volkswagen, no longer is in the running because a VW vehicle would be too expensive, says a high-level DaimlerChrysler source.

Korean automaker Hyundai Motor Co., Mitsubishi Motors Corp. of Japan and Chinese automaker Chery Automobile Co. are being considered as possible partners for the small car, sources said. But they did not rule out other European automakers.

The Chrysler group wants a small-segment car to meet a shift toward fuel-efficient subcompacts in the United States. Chrysler needs a partner because of the high costs and relatively low profit margins associated with building a small car in the United States.

VW and DaimlerChrysler executives had considered cooperating on such a car for Dodge. In May, a VW executive said VW was preparing a proposal to build a small car for Dodge.

A VW spokesman later told The Wall Street Journal that the two automakers were discussing an entry-level car that could be sold by Dodge in the United States.

Chrysler CEO Tom LaSorda said in March that VW, as well as automakers based in Asia and Europe, were being considered to build the small car in cooperation with Dodge. The subcompact possibly would be based on the Dodge Hornet concept that debuted in March at the Geneva auto show.

LaSorda is expected to announce Chrysler's partner for the project in the fourth quarter of this year.