Chrysler eyeing China production through Fiat JV

By Deepa Seetharaman

CHELSEA, Michigan (Reuters) - Chrysler Group LLC is "aggressively" exploring the possibility of building more vehicles in China, where the company is on track to sell 40,000 cars and trucks this year, an executive said on Thursday.

The U.S. automaker, which is managed by Italy's Fiat SpA <FIA.MI>, could build cars and trucks in China through a joint venture between Fiat and Guangzhou Automobile Group Co Ltd <2238.HK>.

By taking advantage of the joint venture, Chrysler can expand more quickly in China. Last year, the automaker sold 31,000 vehicles in China, the world's largest auto market where just over 18 million vehicles were sold.

Fiat signed a joint venture in 2009 with Hong Kong-listed GAC, China's No. 6 domestic automaker, to make cars in China. Chrysler currently builds older versions of its minivan there.

Fiat took over management control of Chrysler just over two years ago when the U.S. automaker emerged from bankruptcy. In those years, the two companies have deepened their operational ties by sharing technology and dealer networks.

"If there's an opportunity for us in the same way as we've done with Fiat in terms of technology or using their distribution, our speed to market is going to be so much quicker," Manley said, referring to the China market.

Manley added that for Chrysler to make its mark in the highly competitive smaller SUV segments, it would have to begin building those vehicles in China.

"Localization is the key to volume -- it's as simple as that," Manley told reporters during a Chrysler media event to showcase the company's vehicles.

Jeep is the centrepiece of Chrysler's efforts to expand its presence outside North America, where the automaker has not had much of a presence.

Jeep will soon launch a Compass and a Grand Cherokee in China, which will help drive sales, Manley said. Chrysler is also exploring the possibility of importing its 300 and 200 sedans from the United States to China.

Jeep also aims to add 50 new retailers in China in the next two years from its current total of 70 dealers, who own 127 dealerships in China, Manley said.

The company plans a fall event in China to recruit new dealers, Manley told reporters at a Chrysler media event. New dealers will primarily sell Jeep and Chrysler vehicles.

Manley and other company executives said boosting fuel economy throughout Chrysler's lineup is a top priority for the U.S. automaker. Its lineup for the 2010 model year ranks last in terms of fuel economy compared with 13 other major automakers, according to the U.S. Environmental Protection Agency.

The company is exploring a variety of ways to boost fuel economy, including a new eight-speed transmission that could be put in the Grand Cherokee, Manley told reporters.

(Reporting by Deepa Seetharaman, writing by Scott Malone; Editing by Lisa Von Ahn and Matthew Lewis)