Hyundai Motor Co has floated plans to enter the high-stakes U.S. pickup truck market and proposed a partnership with Chrysler Group LLC, three people with knowledge of the process said.

As one option, Hyundai made a proposal to Chrysler earlier this year under which the U.S. automaker would build a truck for Hyundai based on Chrysler's Ram truck platform, according to two of the sources.

Such a tie-up would take the place of a now-scuttled alliance between Chrysler and Nissan Motor Co Ltd and could allow Chrysler to expand production and reduce costs for Ram, the No. 3 ranking pickup truck brand by sales.

Chrysler Chief Executive Sergio Marchionne rebuffed Hyundai's initial approach in February, according to the sources, saying the automaker needs to focus on its established turnaround plans under Fiat SpA.

But Hyundai continues to look at truck options and could come back to Chrysler, according to two of those with knowledge of the talks, who were not authorized to discuss the matter because the closed-door discussions were preliminary.

We never say never; however, at this stage, pickup trucks are not high on our priority list, Hyundai Motor America spokesman Dan Bedore said.

Chrysler spokesman Gualberto Ranieri had no comment.

The quiet contacts between Hyundai and Chrysler this year underscore both the growth ambitions of the South Korean automaker and the nagging doubts over whether Chrysler will undergo a further transformation a year after its restructuring in a U.S.-government funded bankruptcy proceeding, analysts say.

For Hyundai, entering the U.S. pickup truck market would mean a bet on a high-margin but fiercely competitive segment where both Nissan and Toyota Motor Corp have failed to break the dominance of Detroit automakers.

Around the time that it made its pitch to Chrysler, Hyundai also showed a focus group in California a picture of a Ram-derived truck with a Hyundai badge to judge the reaction of potential customers, according to one of the sources.

Hyundai executives have also had meetings with representatives of its 800 U.S. dealers in recent months at which the topic of an expanded product offering -- including a potential Hyundai pickup truck -- was discussed, a person who joined those meetings said.

Dealers were enthusiastic in their support of a competitively priced pickup truck, the person said. It was not clear how consumers reacted.


The long-running success of Ford Motor Co's F-series truck -- America's top-selling vehicle -- shows that Hyundai cannot walk away from the U.S. truck market, said Park Sang-won, analyst at Eugene Investment & Securities in Seoul.

From Hyundai's perspective, it could make use of Chrysler's idle capacity, instead of putting in its own money from the beginning. That would be a win-win strategy for both Hyundai and Chrysler, he said.

While sales of full-size pickup trucks have taken a hit in recent years, the market still represents almost 11 percent of overall light vehicle sales and is expected to recover as a recovery in U.S. housing construction gathers pace.

In addition, pickups remain a lucrative stronghold for Detroit automakers, including Chrysler. Sales of a new heavy-duty Ram helped Chrysler surprise analysts by posting a first-quarter operating profit, Marchionne told analysts on Monday.

Some analysts have said Marchionne's Chrysler plans could evolve and have questioned how it could continue to support all four of its brands -- Chrysler, Dodge, Jeep and Ram -- at less than 10 percent U.S. market share.

We remain unconvinced Chrysler will survive in its current form despite Marchionne's blood, sweat and tears, Bernstein Research analyst Max Warburton said in an April report.

A slimming down of Chrysler to be just Ram, Jeep and a U.S. production base for Fiat looks a realistic exit strategy to us, he said.

Hyundai would benefit from hitching itself to a known truck brand rather than trying to go toe-to-toe with a new offering against segment leaders Ford, General Motors Co GM.UL and Chrysler, IHS Global Insight analyst George Magliano said.

That would allow Hyundai to avoid the missteps Toyota and Nissan made, he said.

U.S. pickup truck buyers, many of whom use the vehicles for work, are known for being fiercely loyal to their favored brands. Despite a high-profile push with its Tundra, Toyota still sold only one-fifth the number of full-size pickup trucks last year that GM and Ford sold.

They won't get into the truck business the way that Nissan or Toyota did, Magliano said of Nissan. How many times has Toyota gone through the truck effort and they are still not there.

In 2008, Chrysler and Nissan unveiled a production alliance under which Nissan was expected to build a small car for Chrysler and Chrysler would build a Ram-based pickup for Nissan.

That deal unraveled last year after Fiat moved to take control of Chrysler.

Hyundai and Chrysler were partners in a Michigan-based engine plant joint venture before Fiat took control. In addition, Hyundai had been one of the automakers Chrysler's former owner, Cerberus Capital Management, had approached about potential partnerships in 2008 and early 2009, according to Chrysler executives at the time.

(Additional reporting by Kevin Krolicki and Bernie Woodall in Detroit, editing by Gerald E. McCormick)