Report: FAW Group Eyes Stake in Chrysler

Chinese automaker FAW Group refused comment Tuesday on a report it is considering bidding for a stake in DaimlerChrysler AG's ailing Chrysler Group.

Meanwhile, the Detroit News reported that Chrysler was seeking permission from its parent company to begin building small cars with China's Chery Automobile for export to overseas markets.

The Shanghai-based Oriental Morning Post said FAW had sent representatives to the United States to negotiate a deal for a unspecified stake in Chrysler, citing an unnamed person familiar with the situation.

Staff at the FAW Group headquarters' publicity office refused comment on the report. DaimlerChrysler's public relations department in Beijing also would not comment.

FAW, based in the northeastern city of Changchun, is one of China's biggest automobile makers and a local partner of Toyota Motor and Volkswagen AG.

Speculation about possible deals for Chrysler surfaced after DaimlerChrysler Chairman Dieter Zetsche said Feb. 14 that all options are on the table for the money-losing U.S. business and he would not rule out a possible sale.

Soaring Chinese Demand

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. Chinese rival Nanjing Automobile Group bought the bulk of Britain's MG Rover Group's assets last year.

State-owned SAIC Motor Corp., Shanghai partner of Volkswagen AG and General Motors Corp., holds a 51 percent stake in South Korea's Ssangyong Motor Co.

The Detroit News reported Tuesday that Chrysler was moving ahead with its alliance with Chery, formed last year, to build small cars in China.

It said DaimlerChrysler's supervisory board would review such a proposal in meetings this week. It said the German automaker was also in talks to expand its cooperation with Chery to include auto parts and other car models.

DaimlerChysler's spokesman in Beijing could not be immediately reached for comment on the Detroit News report.

The company recently announced it was preparing a dealership network to launch the Dodge brand in China this year.