Chrysler to bring Chery into NAFTA Region

China's Chery Automobile Co. and Chrysler signed an agreement of cooperation in Beijing on the 4th of July.

Both sides believe that this is a significant and mutually beneficial alliance, whereby Chery will have access to the North American market and Chrysler can seek new growth in the booming Chinese market since its existing market share in North America is being squeezed by Asian competitors.

According to the agreement, Chrysler will kick off the sale of Chery A1 hatchback in the first quarter next year, followed by other vehicles under Dodge brand in Latin America and Eastern Europe by the end of the year. US consumers can buy Chery-made cars within approximately two years .

Chrysler and Chery had begun their cooperation talk some time ago. The two signed a letter of intent last Dec., in which Chery agreed to manufacture subcompact cars for Chrysler and in return, Chrysler will sell them through its global dealership. While waiting for the nod from the Chinese watchdogs, Chrysler was taken over by Cerberus Capital Management, thus bringing the negotiation to an abrupt halt. This was followed by widespread speculations that the cooperation will not fall through.

The ceremony in Beijing has finally put an end to this speculation. Chery's Chairman and President, Yin Tongyue and Chrysler Group CEO Tom LaSorda as well as the local and national government officials attended the ceremony.

Chrysler plans to sell Chery's current and future models worldwide. Chery may eventually build as many as 100,000 vehicles a year for Chrysler, Yin said at the signing-ceremony today, without giving any details on the price or schedule.

"We will combine Chrysler's state of the art technology and global recognition with Chery's lean manufacturing," said LaSorda. The alliance with China's largest domestic automaker will give Chrysler substantial advantages, such as low labor cost and the opportunity to expand in the fast-growing Chinese market. In addition, Chery's vast experience in compact-car production and strength in research and development will allow Chrysler to achieve some savings in its investment.