DJ Report Says Volkswagen Closing in on Van-Making Deal With Chrysler

6:12 am ET

BERLIN November 17, 2005; The AP reported that Volkswagen AG is close to agreeing on a cooperation deal to make commercial vans with DaimlerChrysler AG's U.S.-based Chrysler division, a VW manager told Dow Jones Newswires on Thursday.

Chrysler will build a van for VW based on its Voyager model, said the manager, who spoke on condition of anonymity because he wasn't authorized to discuss the deal with the press. Volkswagen will supply diesel engines to Chrysler and the vans will only be sold in the U.S., he said.

Volkswagen, hurt by a weak dollar and fierce competition, has run up losses of more than US$1 billion (euro1.17 billion) in North America this year. The company's U.S. sales were down 11 percent in the first ten months of this year, compared to a 2 percent uptick in the market overall, according to Autodata Corp.

The company named a new North American chief in October and announced plans to introduce up to 10 new models in the next five years to boost sagging U.S. sales.

Two Chrysler plants are still being considered to produce the VW van, one of which is located in Canada, the manager said, adding that a decision will be made after talks with the two works councils have been finished.