Although General Motor’s North American operations have been suffering over the last few years, the Detroit automaker has secured itself a steady cash flow thanks to its efforts in China. Chrysler , on the other hand, is struggling in North American and in China, compounding the automaker’s woes. Chrysler’s lack of an established foreign game plan could be catching up with the Michigan automaker as it thins its potentially lucrative Chinese operations.
Chrysler’s Chinese operations have been on the backslide for the last year or two, culminating in the exit of Philip Murtaugh. Murtaugh headed Chrysler’s business in China, but decided to call it quits after just 15 months on the job. Before taking the position with Chrysler, Murtaugh served as chairman of GM China and laid the foundation for GM’s success in China.
In addition to Murtaugh’s departure, Chrysler has also been downsizing its China operations. Chrysler of China has already cut back on its sales and marketing efforts and has suspended recruitment for its engineering and R&D services, according to ChinaStakes.com.
One of Chrysler’s biggest problems in China is the lack of a domestic partnership. Chrysler forged early relationships with China’s Chery and Great Wall Automobile Group, but nothing every materialized out of either. As a result, Chrysler has a very weak Chinese manufacturing base, resulting in annual sales of about 20,000 units. As a comparison, GM sold over 1 million vehicles in China last year.
As Chrysler’s financial situation worsens in the U.S., there is little hope for the improvement of its China operations. As a result, Chrysler will continue to fall behind its domestic and foreign rivals, making a full on competitive revival of the company more of a long-shot rather than a sure bet.
