updated 11/17/2006 11:17:06 AM ET 2006-11-17T16:17:06

DaimlerChrysler AG said Friday it is holding talks with China's Chery Automobile Co. about a possible joint venture that would make cars for the Dodge brand for sale in the United States.

CEO Dieter Zetsche was asked during a visit to Beijing about the status of talks with Chinese automakers to beef up Chrysler Group's model lineup and offer smaller, more fuel-efficient cars for the Dodge brand as demand for SUVs and larger models wanes.

He said the company was in talks with several possible partners, but when asked if Chery was the preferred partner, he said: "It's fair to say."

Zetsche said he was optimistic that a decision would be reached in the "not so far future," according to DaimlerChrysler. However, he added that he could provide no timetable "because you can only talk about your own position. It takes two to tango."

Zetsche was in China ahead of the Beijing auto show this weekend.

China has the world's second-largest car market after the United States, with 7 million new vehicle sales per year.

In September, DaimlerChrysler formally opened its first factory to make Mercedes-Benz and Chrysler sedans in China _ part of the company's $1.9 billion investment in China.

The Beijing factory, which produces Mercedes E-Class and Chrysler 300C sedans, as well as Mitsubishi's Outlander sport utility vehicles, is a joint venture with a Chinese partner, state-owned Beijing Automotive Industries Corp.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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