Another Shocker: Chrysler Steals Expert on China
September 07, 2007

As the industry recovers from the shock of Thursday’s announcement that Chrysler had hired Toyota’s top-ranking, Jim Press, the automaker dropped another bombshell: it has hired Phil Murtaugh away from Shanghai Automotive Industry Corp., General Motors’ joint venture partner in China.

In Chinese circles, the news of Murtaugh joining Chrysler in China is nearly as big as the news of Press joining Chrysler in the U.S. as he is credited with building GM’s extraordinarily successful China business.

And the move demonstrates, yet again, Chrysler’s new owner, Cerberus Capital Management, is pulling out all of the stops to buy the world’s best automotive talent to turn Chrysler around.

Murtaugh’s hiring also suggests what AutoObserver has long suspected – that there is a serious China connection involved in Cerberus’ purchase of Chrysler.

Chrysler confirmed to AutoObserver Friday morning the hiring of Murtaugh, who becomes CEO of Chrysler's Asian Operations.

"We went fishing and got a couple of whoppers," Jason Vines, Chrysler vice president of communications told AutoObserver about the hiring of Press and then Murtaugh.

Vines said Chrysler under its new owners was shopping for the best in the business in Asia Pacific. Tom LaSorda, Chrysler co-president and co-vice chairman with ex-Toyota exec Press, said Murtaugh was the best, but that Chrysler would never get him. But they did.

The Associated Press reported Friday morning that Murtaugh confirmed he had  "accepted an offer from Chrysler that I think will be a tremendous opportunity for me.”

“At this stage of my career, it is an offer I just cannot turn down," Murtaugh reportedly said.

The hiring of Murtaugh is yet-another coup for Chrysler. The automaker has extremely ambitious plans to expand globally, and China must be key for any automobile manufacturer serious about a worldwide presence. In fact, Chrysler has a deal with another Chinese automaker, Chery Automobile Co., to jointly produce and export small cars to Europe and the U.S. in the next few years.

Murtaugh, extremely well respected in the Chinese auto industry and inside GM, abruptly left GM after 32 years in June 2006 for what he said were “personal reasons.” He joined GM's partner, SAIC.

It was widely believed by industry observers that Murtaugh wasn’t thrilled with the way GM was reorganizing its China operations and merging them with its Asia-Pacific operations, which were moved from Singapore to Shanghai. Murtaugh had been able to move fast in China and be successful, in part, because he could operate under the radar screen of GM’s bureaucracy. He'll likely thrive under the fast-paced, quick results private equity ownership of Chrysler.

The hiring of Murtaugh and hints of Chrysler's China aspirations lend credence to what AutoObserver learned months ago from sources in financial circles familiar with the Cerberus negotiations for Chrysler. Those sources said the China factor played a major role in Cerberus' consideration of buying Chrysler. One source called Chrysler Cerberus’ “Trojan horse for the Chinese.”

AutoObserver has wondered if Cerberus is scurrying to turn Chrysler around so it can sell it to a Chinese company. In the early days of Chrysler being on the auction block, some analysts had speculated that Chrysler could be purchased by a Chinese company. It would be a ready-way – with Chrysler's extensive distribution network and manufacturing operations – for the Chinese to quickly gain a foothold in North America.

Indeed, both Chery and SAIC are players to watch. Both have ambitious global expansion plans.

In fact, SAIC's hiring of Murtaugh in 2006 was seen as a major move in taking SAIC global.

SAIC, China's largest automaker, partners with the world’s major players, notably GM and VW, to build vehicles jointly with them. SAIC hired Murtaugh to help launch vehicles under SAIC's own brand for the first time in history. That brand, based on the remnants of England's MG Rover that SAIC had purchased, is Rongwei (in Chinese), Roewe in English (pronounced "wrong way," which drew its share of jokes in the business.)

The Associated Press reported Friday that SAIC applauded Murtaugh's contribution to the automaker's efforts to build its own-brand business.

Murtaugh also had been charged with turning around Ssangyong Motor Co., the financially troubled Korean automaker that SAIC bought in 2004. Using the resources of its far-flung operations, especially Ssangyong's electornics capability, SAIC plans to launch a hybrid by the end of this year.

Chery operates independently and sells vehicles under the Chery brand, including the small QQ, over which GM sued Chery – and lost in the Chinese courts – for copying the Chevrolet Spark.

The other question that comes to mind -- who in the world will Chrysler recruit next?

Asked by AutoObserver if the fishing top executives around the world is continuing, Vines concluded: "The boat is in the dock."

Posted by Michelle Krebs at 4:35 AM under Chrysler , Commentary , Personalities | Comments (1) | digg this | Seed Newsvine