DaimlerChrysler Supervisory Board Meets

Associated Press

By MATT MOORE 02.27.07, 6:34 AM ET - - DaimlerChrysler AG's supervisory board was meeting Tuesday with a bevy of topics on the agenda, likely efforts to restructure its ailing Chrysler group and possible cooperation with Chinese peers.

The world's fifth-biggest automaker did not specify what the board, the equivalent of a U.S. board of directors, was discussing. But topics were expected to include the restructuring efforts at Chrysler, including whether to sell it off or find a partner to keep it operating.

DaimlerChrysler (nyse: DCX - news - people ) has maintained that it is considering all options for the money-losing U.S. brand, which has been plagued by consumer demand for smaller, more fuel-efficient vehicles and not the light trucks and larger vehicles it has been producing.

Several automakers, including Volkswagen and the Renault (other-otc: RNSDF.PK - news - people )-Nissan (nasdaq: NSANY - news - people ) alliance, have ruled out any interest. FAW Group Corp., one of China's biggest automakers and a local partner of Toyota Motor Corp. (nyse: TM - news - people ) and Volkswagen AG, refused comment Tuesday on a report it is considering bidding for a stake in Chrysler.

The Wall Street Journal, citing people familiar with the matter, reported Tuesday that worker representatives on the DaimlerChrysler board are opposed to a deal that would see the company take an equity stake in General Motors Corp. (nyse: GM - news - people ) in exchange for Chrysler.

DaimlerChrysler has steadfastly refused to comment on the deluge of speculation, reiterating with each new report that all options were on the table.

Talks by the company's board might also focus on whether it will move ahead with plans to build tiny but economical cars with China's Chery Automobile Co., the country's biggest domestic automaker, for export to overseas markets.

In December, DaimlerChrysler and Chery agreed on a plan for the Chinese car maker to build small cars that would be sold globally.

The cars, known in the industry as "B-cars," are expected to be sold at Chrysler dealerships in the U.S., Europe and elsewhere, likely under the aegis of Dodge, Chrysler or Jeep.

The Detroit News reported Tuesday that the German automaker was also in talks to expand its cooperation with Chery to include auto parts and other car models. The company recently announced it was preparing a dealership network to launch the Dodge brand in China this year.

Big name automakers have set their sights on China and other fast-growing developing markets to help offset legacy costs and provide sales growth missing in the U.S. and other Western markets. So far, domestic and foreign manufacturers have focused mainly on meeting soaring demand inside China.

But at the same time, Chinese automakers have begun looking overseas for acquisitions, both to expand their market reach and to tap advanced technology and design capacity.

Chery is China's biggest domestic automaker, with 272,400 vehicles sold last year, but it trails General Motors Corp., which sold 876,747 vehicles last year, as the country's biggest automaker.

Based in the southeastern province of Zhejian, south of Shanghai, Chery already assembles vehicles abroad in facilities run with local partners in Iran, Malaysia, Russia, Ukraine, Brazil and Egypt.

Shares of DaimlerChrysler were down nearly 1.4 percent to euro52.94 (US$69.67) in Frankfurt trading.