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Thu Sep 11, 2008 5:26pm EDT

DETROIT (Reuters) - Chrysler LLC said on Thursday it is in talks with German supplier ZF Friedrichshafen to operate the automaker's new axle plant in Michigan.

The new plant is under construction in Marysville and expected to be operational in 2010, a Chrysler spokesman said.

ZF is one of the world's largest auto parts makers, producing transmissions, steering systems, axles and chassis components. ZF Group had revenue of 12.649 billion euro in 2007, or about $17.7 billion (euro = $1.3992), according to its website.

Chrysler has increasingly targeted alliances as it looks to free up cash amid a deep downturn in U.S. auto sales in the year since Cerberus took over the automaker.

LINK:Chrysler in talks with German supplier on plant | Markets | Markets News | Reuters

The $700 million Marysville, Michigan axle plant is part of a $3 billion investment Chrysler announced in April 2007 to produce more fuel-efficient V6 engines and related components.

The new Chrysler engines, dubbed "Phoenix" to underscore their importance in the automaker's competitive rebirth, are set to be produced at a new plant in Trenton, Michigan.

Chrysler relies on sales in the North America market for over 90 percent of its global sales, a higher percentage than larger rivals General Motors Corp and Ford Motor Co .


Chrysler's U.S. sales have dropped 25 percent since the start of the year.
 
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