Wednesday 1 October 2008

Dodge Caliber reportedly to be built in Russia by GAZ (RU)

The Dodge Caliber is Chrysler's top-selling vehicle in Russia and now the small family car may be built there as well. Chrysler and Russia's second largest automaker, GAZ Group, are in talks to use idle capacity at the Gorkovsky Automobile Plant to assemble Calibers, local media are reporting.

The partnership talks, if successful, could open the door for a strategic partnership agreement and enable Chrysler to overcome its weak financial position while strengthening its foothold in one of the world's fastest-growing car markets, analysts said.

"A strategic alliance would allow Chrysler to reduce its reliance on the North America market, while GAZ Group would benefit from an injection of modern automobile production technology and funds," said Marina Irkly, an automobile analyst with Moscow-based Veles Capital Investment Company.

Flagging sales have forced GAZ, which produces commercial vehicles, to cast a wide net for strategic partners that would help overhaul its Volga passenger-car assembly line. The company has lately held partnership talks with Western automakers including General Motors and Chrysler. GAZ has said Chrysler is a possible strategic partner, and that both sides could assemble the entire range of its cars in Russia.

The Dodge Caliber's sales soared a record 82% in Russia in the first half of 2007 alone. However, the American automaker sold just 2,800 Dodge Calibers between January and June 2008, landing it at an unenviable 32nd place on local dealers' list.

GAZ is also eyeing a partnership deal with General Motors which could offer several inexpensive car models, including Korean-made Chevrolets. GM sold 114,500 Chevrolets in the country in the first half of this year, becoming a market leader in foreign-car sales.

Magna International, Canada's largest automobile parts manufacturer, is expected to partake in any future joint venture between GAZ and Chrysler, supplying the bulk of car components. The Canadian company has also considered assembling Chrysler vehicles in Russia.

The company announced in June that it would follow through on a November 2006 agreement with GAZ to launch the production and logistics of automobile parts and components in Nizhny Novgorod in late 2008.

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