Chrysler expects restructuring plan by February

Reuters / January 4, 2007 - 3:00 pm DETROIT (Reuters) -- The Chrysler group should have a restructuring plan ready by February as it aims to recover from a loss expected to be near $1.3 billion for 2006, the automaker said today.

It has set a target of doubling its sales outside North America over the next five years to roughly 400,000 units.

"That's the overall plan that we will take to the marketplace. It will probably be by the end of the second month of the year," Chrysler group CEO Tom LaSorda told reporters on a conference call.

He added: "It will outline what we need to do on a wide scope of business, and I'm not providing any details until that day."

LaSorda also said the Chrysler group would remain open to product-focused alliances like the one it has clinched with China's Chery Automobile Co. to produce a new small car for export to Europe and the United States.

"The opportunities outside the U.S. are becoming more and more important," LaSorda said.

The Chrysler group announced a partnership with Taiwan's China Motor Corp. to export cargo vans to Mexico.

Under the deal, China Motor, which now makes a Chrysler-branded minivan for sale in Taiwan, would produce a Dodge-branded cargo van at its assembly plant in Yangmei, Taiwan, for the Mexican market, the Chrysler group said.

The automaker said it would also license China Motor and Fujian Motor Group of Fuzhou, China, to make a minivan for the Chinese market.

"There are ways to capture growth in different ways rather than putting a lot of your own capital out there," LaSorda said. "So we'll look at those kinds of opportunities."

The Chrysler group's U.S. sales slipped 7 percent in 2006, although sales outside the United States were up almost 7 percent. On a global basis, vehicle sales fell 4.5 percent.

In the U.S. market, DaimlerChrysler, which includes the parent company's Mercedes-Benz brand, slipped to become the No. 4 player, behind Toyota Motor Corp., which saw its own U.S. sales rise 13 percent.

Like other automakers, the Chrysler group is expected to face a flat to weaker market for vehicles sales in the United States this year, and LaSorda said the company would increasingly look for growth outside North America.

The company has previously said that its restructuring plan would look to cut $1,000 from the cost of each vehicle produced. Analysts have expected it to consider shutting a plant and asking the United Auto Workers for concessions on health care costs.

The Chrysler group has said it expects to report a 2006 loss of some $1.3 billion. Inventories of unsold pickups and SUVs have piled up and strained relations with U.S. dealers.

The Chrysler group is moving toward offering smaller vehicles to lessen its reliance on SUVs, trucks and minivans and target a segment of the market expected to be boosted by the consumer concern over high fuel prices.

The new small car that Chery is to build for the Chrysler group would allow the automaker to compete for young buyers and those for whom a cut-rate price is the most important consideration, the Chrysler group said in a statement.