Auto Talk: Chrysler Looks at Europe Strategy, Big SUV

DETROIT - Daimler-Chrysler AG continues to weigh the pros and cons at both ends of the market: a small-car strategy for Europe and the addition of a large sport/utility vehicle (SUV) for North America.

A small car for Europe could include the acquisition of another automaker, but no timetable has been set for making a decision, says DaimlerChrysler Corp. President James P. Holden.

Sources say DC is in negotiations involving an equity swap with Fiat SpA. An aquisition is one of three possible European scenarios, Mr. Holden says in an interview. Another option is to go it alone with a Chrysler-brand small car, or DC could form an alliance with another automaker to share platforms, components or European plant capacity, Holden says.

There is some urgency to making a decision. DC believes it needs small cars in Europe - in part to meet voluntary emissions limits for 2006 that will force a more fuel-efficient fleet. But don't look for a decision by the end of the first quarter, Mr. Holden says. "We talk about it periodically at the board," he says. "But if you say I'm going to make a decision on March 31, you might make a bad decision."

At the opposite end of the market, Mr. Holden says he believes there is some softening in the big sport/utility vehicle (SUV) market, but adds that it doesn't mean his company won't ante up an entry.

Reports late last month indicated DCC was scrapping plans to produce a full-size SUV for Jeep that would compete with the likes of the Ford Expedition, Chevrolet Suburban and the new Toyota Sequoia that bowed at the Detroit auto show.

"The difficulty I have with that story," says Mr. Holden, "is that I can't confirm canceling something I never confirmed I was planning to do. It's either Jeep or Dodge. Both brands have the ability and the through-put capability to take on the segment."

Fears of segment softening may have DCC backing off, going to just one brand for the big SUV. "Personally, I think the big, big stuff has peaked," says Mr. Holden. "I could be wrong. I thought that a couple of years ago, and it has continued to grow."

He won't say when DCC could have a bigger SUV on the market, though reports indicate a 2002 timeframe.

"My dealers would like one last year," Mr. Holden says. "Our development cycle is 32 months. If I had a brilliant idea today and walked out of here, I could have it in 32 months. Unless I had that brilliant idea 12 months ago, then I could do it in 20."