Default Chrysler CEO Downplays Noise About Auto Maker Alliances

John D. Stoll, DOW JONES NEWSWIRES DETROIT -- The chief executive of DaimlerChrysler AG's (DCX) U.S. unit said Thursday he isn't spending much time evaluating what-if scenarios related to the potential of another major alliance in the global auto industry.

Tom LaSorda, speaking during an interview at Chrysler Group headquarters, said he expects consolidation to take place in the global auto industry in coming years, but said "it will be very slow and calculated." He said he doesn't foresee "a lot" of consolidation between auto companies in the near future and said he expects most of the merger activity to take place on a regional basis.

"I think what you'll find is there may be consolidation taking place in regions of the world that had never had that taking place," he said. Small Japanese companies, such as Suzuki Motor Corp. (7269.TO) or Isuzu Motors Ltd. (7202.TO), may be strong alliance candidates for some auto makers, LaSorda suggested. He also said there are a slew of Chinese companies that might be ripe for partnering up with bigger auto makers looking to make inroads in China.

LaSorda's comments come as the potential of a tie-up involving General Motors Corp. (GM) and the existing alliance between Renault SA (13190.FR) and Nissan Motor Co. (NSANY) has dominated auto industry headlines in recent weeks. The possible tie-up was first publicly floated by GM investor Kirk Kerkorian on June 30 and the companies began discussing potential synergies in mid-July. The preliminary talks are set to conclude in October.
Earlier this week, The Wall Street Journal reported that Ford Motor Co. (F) Chief Executive Bill Ford has called Renault/Nissan Chief Executive Carlos Ghosn concerning forging an alliance if talks with GM fall through.

A new alliance involving any of the companies promises to shake up the global auto industry and would impact key players, including DaimlerChrysler, which is the sixth largest auto maker in the world in terms of production volumes, according to Ward's Automotive Reports.

Renault/Nissan is the fifth largest player when production volume is combined for both companies.

LaSorda said a GM/Renault/Nissan alliance would result in a mega-player. Indeed, such an entity would dominate the global production landscape, owning 24% of the world's vehicle output share with a presence in virtually every market in the world.

When asked if Chrysler has followed on the heels of other auto makers, such as Ford, and begun game-planning to prepare for such an alliance, Lasorda said, "No, what I have to game-plan is great products, quality and (market) share. If somebody joins forces with someone else, I wish them limited success."

Chrysler merged with DaimlerBenz in 1998. It has spent the past eight years combining various functions of the company, including engineering, while trying to sharpen the focus of DaimlerChrysler's various high-volume and luxury brands. The company has cited various instances where it has achieved cost savings thanks to the partnership.

DaimlerChrysler is now utilizing the Chrysler business, which includes the Chrysler, Dodge and Jeep brands, to grow in various global markets. Chrysler has begun an aggressive push in China, for instance, and recently launched the Dodge brand in Europe. DaimlerChrysler's Smart brand, run by the Mercedes car unit, is headed for the U.S. in 2008.

LaSorda is preparing the U.S. arm of the company for its next push into global markets as he finalizes a plan to partner with another auto maker to build sub-compact cars in Asia or Europe. LaSorda said the company is in talks with more than one auto maker about the joint-venture and it plans to utilize the small car to grow in various regions, including Europe, while capitalizing on growing demand for fuel-efficient cars in the U.S.