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DaimlerChrysler AG is in talks with one of its Chinese partners to build a plant in China in order to export subcompact cars to the United States, a top company executive said Thursday at the Shanghai Auto Show, according to a New York Times report.

Ruediger Grube, the DaimlerChrysler executive president and management board member in charge of corporate development and China operations, said that while no final decision had been made, he hoped that the details could be worked out in the second half of this year. It would almost certainly be the first mass-produced Chinese car widely sold in America.

Grube's aides were surprised that he mentioned the negotiations and said afterward that they had no further information except to say the car would a small sedan, not a coup, and roughly the size of the Chevrolet Aveo.

Low wages make China a very attractive place to build cars, Mr. Grube said. "China today has a big, big, big advantage as far as labor costs are concerned."

Grube would not provide forecasts of the production schedule, but it would take at least two years to get a plant up and running.

Earlier this year, a Chinese company, Chery Automotive, announced plans to try to set up a distribution network in the United States in 2007, working with Malcolm Bricklin, an entrepreneur who tried to distribute the Yugo, a car from Yugoslavia.

But top executives from established American and European automakers have dismissed the likelihood of Chinese automakers selling significant numbers of cars in the United States on their own.

Grube declined to say which of its two Chinese partners - Beijing Automotive Industry Holding Company Ltd. and the Fujian Motor Industry Group - was involved in the talks.
But Daimler is already building Jeeps for the Chinese market with Beijing Automotive and will start making Mercedes C- and E-Class sedans for the local market with Beijing Automotive in October or November at a plant now under construction outside of Beijing.

By contrast, Fujian Motor is Daimler's partner in making large vans and would appear a less-likely partner for small car production.