Sergio Marchionne says no deal yet on Chrysler expansion

Chrysler's chief executive says discussions with Ottawa and Ontario for additional investment in Canada haven't yet yielded the results he's seeking.

Sergio Marchionne says his company wants to make significant investments in Canada and that, as a Canadian, he'd like to see his company invest in the Brampton and Windsor plants.

"Look, I grew up in this country. I remember the size of our manufacturing sector was on the car side, and I remember how many plants we had not just in Ontario but Quebec too," he said in a press conference at the Canadian International Auto Show in Toronto.

"And I've seen that position shrink over time. It has also happened in the U.S. and it's my sincere hope that we don't end up shrinking this business to the point where it becomes an irrelevant part of the Canadian landscape."

But he said the two levels of government have to provide "preferential financing" to win long-term investment. and noted that other jurisdictions have approached the auto maker since its expansion plans have became public.

Halfway there

Marchionne refused to confirm reports that Chrysler was looking for $700 million from the governments as part of a $3.6- billion overall investment, saying these figures were not put forward by him.

He confirmednegotiations were continuing and the company was about halfway to getting what it was seeking.

"It's one of the most capital intensive industries, other than oil and gas industry which is a life of its own. But you know for us to make a car it's a $2 billion bet. It's a billion in architecture and it's another billion to build the thing," Marchionne said.

He spoke of the renewed vitality, and return to profitability, of the automotive industry in his prepared remarks to the auto show, but he said the North American car companies could not afford to repeat the mistakes of the past, such as creating too much capacity.

Chrysler said last month it was considering an upgrade at its Ontario plant to build a new minivan, but was in talks with the government about an incentive package that would help offset higher costs in Canada.

Victory expected

The federal government said in this week's budget that it had set aside an additional $500 million for the Automotive Innovation Fund, but did not release details.

Automotive analyst Dennis Desrosiers says he has no doubt the federal and provincial governments will eventually give Chrysler what it wants.

Every major investment in the auto industry has the heavy hand of government in the background, he told CBC News.

But the deal may eventually rest on how much the automotive union, Unifor is willing to give, he said.

Sergio has been ruthless with unions around the world, Desrosiers said. "Why wouldnt he come into Canada and say weve got a cheque here from the government for anywhere from $300 million to $700 million we want you to match it in concessions or other things the union could be doing."