As Chrysler and Daimler prepare to end their tie-up in Beijing Benz-DaimlerChrysler Automotive Co., Ltd. (BBDC), the local production of the Chrysler 300C might be suspended in China, according to a recent report in China Business News.
German automaker Daimler AG is said to have reached an agreement with its former partner Chrysler LLC over the future of BBDC, a 50:50 joint venture between Daimler and Chrysler as one party and Beijing Automotive Industry (Holding) Co., Ltd. (BAIC) as the other party.
No more details are provided, however, the result might be that Chrysler quits from the Beijing-based 30-year joint venture. According to the report citing an insider close to BBDC, a majority of Chrysler’s technicians from the U.S. have left BBDC, except four persons in charge of production supervision. Meanwhile, Daimler has begun upgrading part of the production equipment in BBDC, an effort to make them meet the production standards of Benz-branded cars. Separation of Daimler and Chrysler in BBDC is expected to be initially completed at the end of this year, said the insider.
BBDC reduced the production capacity of the Chrysler 300C and the Chrysler Sebring to a large extent due to their poor sales, added the insider. The report said the company is weighing a plan to suspend the production of the 300C, as its stock could well satisfy the demand in the Chinese market. The production may be resumed later in order to consume the stock of auto parts and components.
A related person from Chrysler Asia operations denied the news, saying that both the manufacture and the sales of the 300C and the Sebring are continued as usual. “We will not give up easily for the success of the two models,” said the person.
However, once Chrylser quits from the tripartite JV, the company will have to decide whether it will continue the production. “The market demand will determine,” said the insider. Given the current poor performance of the two models, BBDC would probably suspend its production and focus on its own products.
Since the divorce of Chrysler and Daimler in the global market, the No. 3 American automaker is reportedly to have negotiated with several Chinese automakers, including Chery and Great Wall Motor, over the establishment of auto joint ventures in China. Chrysler Asia has acknowledged the report but declined to reveal who it will join hands with.
BBDC will become a venture between Daimler AG and BAIC after Chrysler’s quit. It has formed a new board and plans to attach more importance to the adjustments of its own structure and personnel in the second half of this year, revealed the insider. Notably, Daimler has made a decision to introduce a new sedan model to the Chinese market in 2010.