DaimlerChrysler targets 40 pct local content for Chrysler 300C, Benz vehicles

BEIJING (XFN-ASIA) - DaimlerChrysler will look to introduce more models to the China market, while also raising the local content of vehicles produced here to over 40 pct, DaimlerChrysler chairman Dieter Zetsche said.

Zetsche said the company will seek to hit this local content target for the Chrysler 300C and Mercedes-Benz vehicles made in China, adding that the 40 pct threshold would be reached more easily for the 300C.

'By 2008, the Mercedes E and C classes will have achieved high production levels, while Chrysler 300C will be at full pace,' he added.

He also said that the company will introduce more models to the China market. We will work with our partners to bring new models here,' Zetsche said.

He did not provide specific details or a time-frame.

Zetsche was in speaking in Beijing to mark the opening of a new plant with DaimlerChrysler's joint venture partner, Beijing Automotive Industry Corp (BAIC).

The plant has an initial production capacity of 105,000 vehicles.

BAIC chairman An Qingheng said the venture is aiming to produce over 300,000 vehicles a year, but Zetsche did not confirm the target.

'We are now building up capacity for 80,000 units,' Zetsche said.

'There will be possibilities for expansion and I am confident that significant volume growth will be possible for us,' he added.

Separately, Zetshce said DaimlerChrysler has held discussions with a number of potential partners on the possibility of producing a B-segment vehicle to be sold under the Dodge brand.

China's Chery Auto said in May that it was holding talks with DaimlerChrysler, although it did not confirm the talks were about a compact car project.

'We were, and we are, in discussions with a number of partners. We are aware that we do not have the facilities to produce a vehicle in that segment at an economically viable level, so therefore we have been continuously talking with various partners,' Zetsche said.

'There is one partner that we have made a lot of progress with, but we still have not come to a final decision,' he added.

He also said that the company's auto finance arm, DaimlerChrysler Auto Finance (China) Ltd, will expand into four more cities over the next few months.

'The development of financial services is absolutely critical,' Zetsche said.

The unit currently offers dealer and customer financing, as well as insurance services for vehicles, through 20 dealerships in Beijing, Shanghai and Guangzhou.

According to Automotive Resources Asia Ltd, around 10-15 pct of vehicle sales in China are purchased on credit, compared with 70-75 pct in developed countries.