China Deal to Give DaimlerChrysler a Shot in the Arm

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Last updated at: (Beijing Time) Sunday, September 07, 2003

China Deal to Give DaimlerChrysler a Shot in the Arm

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The head of German car giant DaimlerChrysler AG was quoted on Saturday as saying he was close to securing a deal to build Mercedes cars in China, but a target for Chrysler to break even would be tough.

Chief Executive Juergen Schrempp told news magazine Der Spiegel he would sign an agreement with Beijing Automotive Industry Holding Company in China in coming days to produce luxury Mercedes cars as well as trucks, reported Routers.

Shrempp confirmed that DaimlerChrysler planned to build around 25,000 of its C and E class Mercedes cars per year in the medium term.

Foreign carmakers are pouring into China, the world's fastest growing car market as demand stagnates elsewhere, but theyneed to have local joint venture partners in order to enter the market.

A spokesman for the company said Schrempp was on his way to China.

But, in a transcript of an interview to be published on Monday, he also said Daimler's troublesome U.S. Chrysler unit still faced some tough challenges.

"We are still aiming to be lightly positive at Chrysler this year," he said. "But due to significant risks concerning a possibly more difficult competitive environment in the United States, this will be a tough bit of work."

Few analysts expect Chrysler to break even this year as it struggles in a fierce price war between the U.S. carmakers.

Schrempp also reiterated that the company planned to make an operating profit of about five billion euros ($5.4 billion) this year.

The company cut its profit guidance for the year in June from a previous target of beating the 5.8 billion euros profit it made in 2002.

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