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VW Negotiates With Chrysler on Minivans as Output Pauses

Volkswagen AG (VOW), Europe’s biggest automaker, is negotiating with Chrysler Group LLC about future production of its Routan minivan as output of the model stops for at least five months.

Chrysler, majority owned by Fiat SpA (F), hasn’t assembled the Routan at its factory in Windsor, Ontario, since July, according to the company’s website. Volkswagen and Chrysler plan to review their agreement in early 2013, said Dino Chiodo, president of the Canadian Auto Workers Local 444 in Windsor.

Volkswagen agreed with Chrysler, then owned by Daimler AG, in 2006 to an alliance for minivan production that began two years later. Sergio Marchionne, chief executive officer of both Chrysler and Turin, Italy-based Fiat, has clashed with Volkswagen CEO Martin Winterkorn this year as Europe’s auto market slumps to a 17-year low.

“There truly hasn’t been a decision one way or the other” whether production of the Routan will continue in Windsor, Scott Vazin, a Volkswagen spokesman, said in a telephone interview. Jodi Tinson, a Chrysler spokeswoman, declined to comment.

Chrysler has built 8,662 Routan minivans this year through November, 38 percent fewer than a year earlier, according to the Auburn Hills, Michigan-based company’s website.

Production climbed 21 percent to 185,613 for the Dodge Grand Caravan and 15 percent to 119,530 for the Chrysler Town & Country and Lancia Grand Voyager, sold in Europe.

Volkswagen’s agreement with Chrysler to build minivans in Windsor runs through the 2014 model year, Vazin said.

Marchionne’s Evaluation

Marchionne, 60, has said he’s evaluating whether Chrysler needs both the Town & Country and Grand Caravan and which model will remain in the market that Chrysler has led since introducing the first minivan in 1983. The U.S. minivan segment shrank to 3.7 percent of U.S. light-vehicle sales last year from 7.9 percent in 2000, according to researcher Autodata Corp.

“We have spent an inordinate amount of time looking at that market,” Marchionne said of minivans during a Nov. 15 press conference at a Chrysler engine plant in Detroit. “I’ve run more clinics on models than God knows. We’ve been doing this now for over a year.”

Town & Country sales climbed 21 percent to 102,486 this year through November while the Dodge Grand Caravan rose 29 percent to 127,308.

Volkswagen, which has U.S. operations based in Herndon, Virginia, sold 9,923 Routans this year through November, a 17 percent decline from a year earlier.

To contact the reporter on this story: Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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