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October 10, 2008

NEW DELHI: Detroit major Chrysler is understood to be in advanced talks with Argentum Motors, owned by former Hyundai-boss BVR Subbu and Spice Jet’s
Ajay Singh, for a contract manufacturing alliance. Sources say, Chrysler is interested in contract manufacturing its SUV range (which includes once-best-sellers like Jeep Cherokee and Grand Cherokee) and Dodge line-up (for which it’s looking for small car options) in India both for sale in India and North America.

Chrysler has been in precarious financial health and the management has been looking to forge relationships with low-cost manufacturers in China and India, both for an emerging market footprint as well as for sale in North America. Mr Subbu told ET: “Argentum is in talks with several global automotive players. Given the structure of the Indian market, we are in talks with manufacturers who can give us a range of vehicles in the 3.5-4.4 metre overall length category. Obviously, these would necessarily be budget cars. None of these discussions have reached a final concrete stage yet.”

Analysts say the emerging market push and low-cost sourcing strategy of Chrysler is crucial for it to turn around. The carmaker is eyeing fuel-efficient and frugally manufactured models to improve margins. Chrysler was bought over by PE firm Cerberus last year, but according to media reports, its new parent has reportedly been having problems pumping fresh funds into the loss-making carmaker for new product development and running costs.

Argentum was earlier reportedly in discussions with Daimler as well but it fell through and the German biggie later decided to tie up with Hero Motors for a truck JV. The company, which owns Daewoo Motor India’s now-defunct plant in Surajpur, is looking to tie up contract manufacturing deals with top MNCs looking for a low cost manufacturing base in India.

Chrysler recently announced an alliance with China’s Great Wall Motor for a small car which industry has dubbed the ‘A-Class’ car. Earlier, it tied up with another Chinese company Chery for small cars to be sold worldwide, badged as Dodge vehicles.

Sources say several Chrysler models — including the Jeep Grand Cherokee — were being tested by Argentum. However, Mr Subbu refuted that connection saying that the vehicles had been imported by Argentum for its own benchmarking purposes.

Chrysler has already acquired an Indian connection for its electric vehicle range. Tata Motors has entered into an arrangement with Chrysler to develop an electric version of the Ace light truck for sale in North America. Chrysler’s Global Electric Motorcars section will import the fully-built vehicles for sale in America.

LINK: Argentum may make Chrysler SUVs- Automobiles-Auto-News By Industry-News-The Economic Times
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