updated 8/23/2005 3:22:27 PM ET 2005-08-23T19:22:27

Volkswagen is in advanced discussions with DaimlerChrysler about selling a large minivan, or people carrier, built in a Chrysler factory in the U.S., in the second co-operation between the two German carmakers.

The move would help VW fill a gap in its product line-up after abandoning plans for an updated version of its 1960s classic Microbus. It is unlikely that VW would attract enough customers to justify developing and building its own model from scratch. It would also be positive for Chrysler, helping increase the utilization of its people-carrier factories in the U.S. and Canada, potentially boosting profits.

Neither Chrysler nor VW would comment on Tuesday, but sources close to the companies said the talks were nearing conclusion. One said it would make sense to sign the deal at the Frankfurt Motor Show in September if it was finalized in time.

The talks were pushed by Wolfgang Bernhard, the former Chrysler chief operating officer who now heads the VW brand. Mr. Bernhard was a strong supporter of the new generation of Chrysler people carriers.

"It is driven by him," said one person familiar with the talks. But the discussions are understood to have started before he joined VW.

The car, based on the Chrysler Voyager, would be aimed mainly at the U.S. market, where VW has been struggling. It lost almost €1 billion ($1.2 billion) in the U.S. last year as a result of poor sales and the weak dollar. Adam Jonas, motor analyst at Morgan Stanley in London, said there was a "growing possibility" that losses could double to €2 billion by 2008.

VW agreed last year to provide diesel engines to Chrysler for use in its exports to Europe, although they are not yet on sale.

Mr. Jonas said the closeness of Mr. Bernhard and Dieter Zetsche, his former boss at Chrysler now selected as head of the DaimlerChrysler group, could lead to deeper co-operation.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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