Chrysler, the least international of the Big Three" US carmakers, took a further step to realise its global ambitions on Tuesday with a decision to build a new assembly plant in Brazil.
The move, at an undefined site, will reinforce Brazil's growing importance as one of the world's most dynamic vehicle producers and as South America's prime market.
The choice also reflects the impact for foreign carmaker groups of the commercial opportunities presented by the Mercosur free trade zone. Mercosur groups together Brazil, Argentina, Paraguay and Uruguay.
Chrysler will also expand its $100 million car plant in Argentina, announced last September, to cope with an expected increase in demand.
Together, the Brazilian and additional Argentine investments will cost about $380 million. Chrysler's new Brazilian factory, costing about $315 million, will build the Dakota compact pick-up truck, launched this month in the US.
Capacity at the plant, which should start production in 1998, will reach 40,000 units a year, but will start at about 12,000 units in its first year.
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The Brazilian plant will be accompanied by a new four-cylinder engine facility, probably in the vicinity, to be built by Detroit Diesel, the US diesel engine group partly owned by Mercedes-Benz.
Detroit Diesel's Italian VM Motori subsidiary already supplies Chrysler with diesel engines for its European-built sports utility and multi-purpose vehicles.
The new Detroit Diesel factory, which is expected to replicate the modular manufacturing processes developed by VM, will initially supply only Chrysler.
However, the company expects sales to expand to other vehicle groups and said it might also manufacture heavier-duty five or six cylinder engines for the region's sizeable heavy lorry industry.
In Argentina, Chrysler will add the Jeep Cherokee sports utility model to the Grand Cherokee which should start production at the new $100 million Cordoba plant early next year.
Annual output of the two vehicles at Cordoba should start at about 10,000 units and reach 16,000 at full tilt.
The Brazilian and Argentine facilities will help to re-establish Chrysler's growing international manufacturing presence after withdrawing from foreign markets in the 1980s.
Foreign sales have climbed steadily since the company re-entered overseas markets in 1987 and amounted to more than 200,000 units last year.
The two plants will consolidate Chrysler's position as one of the world's leading makers of US designed light trucks.
These range from utilitarian pick-ups to trendier sports utilities and multi-purpose people carriers.
Light trucks also dominate the company's exports, accounting for about 75 per cent of its foreign sales volume.
Chrysler's Brazilian and Argentine investments represent a vote of confidence in the Brazilian vehicle market and the wider economic benefits of the Mercosur.
Our decision to manufacture in Brazil and expand production in Argentina is based on the favourable economic conditions and future growth prospects we see in the Mercosur," said Bob Eaton, Chrysler's chairman.
In spite of continuing concerns about regional economic volatility and the current downturn in some markets, a number of leading vehicle groups have announced new investments in the two countries this year.
Renault is building a plant to make about 120,000 mid-sized Migane models a year, while Mercedes-Benz will build a factory to manufacture about 70,000 small A Class hatchbacks. Honda and Toyota have also announced plans for lower-volume output at new plants.
Separately in Argentina, Fiat and Chrysler are developing new production facilities, while Ford, General Motors and Volkswagen, the region's leading carmarkers alongside Fiat, are stepping up output in both countries.