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Chrysler CEO warns of Chinese companies exporting cars


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http://online.wsj.com/article/SB10001424053111903454504576485920161518138.html?mod=ITP_marketplace_1

 

By JEFF BENNETT

 

TRAVERSE CITY, Mich.—Chrysler Group LLC and Fiat SpA Chief Executive Sergio Marchionne said he will change Chrysler's board by month's end and said he could retire sometime after 2015.

 

"There is going to be a guy after me, I guarantee you," he said. "Don't focus on the date, I would focus on the process."

 

Meanwhile, plans by Chinese companies to export autos pose an "enormous" risk to established car makers based in Europe and North America, Mr. Marchionne said during his keynote speech at an annual automotive conference here.

 

That Mr. Marchionne would remake Chrysler's board had been expected after Fiat took a 53.5% share of Chrysler last month by purchasing stakes from the U.S. and Canadian governments. But until Wednesday, the CEO hadn't confirmed such plans.

 

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Chrysler Group Chief Executive and Fiat CEO Sergio Marchionne, in June

 

"We will have discussions with the board over the next couple of days and I think, hopefully, we will have a resolution by the end of the month," Mr. Marchionne said on the conference's sidelines. "I think it's to be reasonably expected [some directors will leave], without it being traumatic."

 

The U.S. and Canada received stakes in Chrysler and the right to appoint directors after lending to the auto maker during its 2009 bankruptcy. The U.S.-appointed directors are Chairman C. Robert Kidder, Douglas Steenland, Robert Thompson and Scott Stuart. George F.J. Gosbee represents Canada's interests.

 

Regarding his own position, Mr. Marchionne said he has "always believed my successor would come from the inside."

 

"This large management team, where we have 22 people representing nine nationalities, is designed to be a proving ground for people to sit and manage," he said. "It's more than likely my successor will come from that structure."

 

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Auto Sales Sluggish

His discussion of a possible successor sent Fiat shares down 1.7% to €5.98 ($8.49) in Milan trading.

 

Mr. Marchionne last week said he formed a Group Executive Council that will be responsible for running day-to-day business and for setting a unified, long-term strategy for Fiat and Chrysler. Until then, Mr. Marchionne had a team of about two dozen Chrysler executives reporting to him, and a similar situation at Fiat.

 

Regarding China, auto makers there currently "produce almost entirely for the enormous domestic market, but their future plans for the export market are significant," he said. "Even assuming China were to export only 10% of what it produces, the risk we face in our home markets is enormous."

 

Western auto makers "cannot afford to be unprepared for the ascent of China" and "need to continue to work to make our industrial base more competitive, because the day of reckoning is inevitably coming," he said.

 

Western auto makers also can't count on dramatic growth in Asia to drive prosperity so must make their North American and European operations more competitive, he said.

 

Mr. Marchionne also said Chrysler and the auto workers' union are attempting to hammer out a new contract that rewards workers while protecting the company's competitiveness.

 

"Our relationship with the UAW is crucial," he said during his keynote address. "It is not my intention to engage in public negotiations, but my general observation is that the tone of dialogue has been incredibly productive."

 

The auto maker is focusing discussions on creating merit-bonus programs. It also plans to pull work that had been outsourced to parts suppliers back into its assembly plants rather than raise hourly wages. The UAW wants to protect union jobs and recover some of the concessions workers gave up before the company's bankruptcy filing.

 

UAW President Bob King is attempting to reach labor agreements with Chrysler, Ford Motor Co. and General Motors Co. simultaneously. Talks with all three started last week.

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