President and CEO Tom LaSorda stops short of confirming with whom and where Chrysler Group might partner for a small, B-segment car.

But he lays out a compelling case for why the auto maker will need such a vehicle if it is to accelerate an aggressive expansion into international markets.

Still, he cautions reporters following a speech to the Automotive Press Assn. in Detroit that if Chrysler “can't find a partner to do (a B-car) profitably, we will not go into the segment.”

A recent report in German magazine Der Spiegel suggested parent DaimlerChrysler AG is close to a deal with China's Chery Automobile Co. Ltd. for collaboration on the new small car for world markets.

Chrysler earlier had confirmed it was talking to Volkswagen AG about a tie-up on small cars, but those negotiations reportedly have ended because the two couldn't meet cost targets. Chrysler wants to sell the car for less than $10,000 in the U.S. and less than €10,000 ($12,754) in Europe.

Also on the short list of candidates, a Chrysler executive told Ward's in April, is Mitsubishi Motors Corp. Hyundai Motor Co. Ltd. has been rumored as a potential collaborator, as well, as has Chery.

But LaSorda won't speculate on possible partnerships.

“We continue to do studies,” he says. “We hope to report on our progress in the last quarter (of 2006). We're looking at all regions of the world, including Western Europe and Asia. China has not been ruled out.”

A partnership is needed in order to limit development and production costs, LaSorda says, but also to get the car to market more quickly. He doesn't indicate how soon Chrysler would like to add a small car to its lineup, but notes the growing pressure to have such a model in the U.S. to attract younger, entry-level buyers, particularly in light of rising gas prices.