Chery plans to build Yaris-size car in new plant

Fitted with 1.3- and 1.5-liter engines, the Yaris-size model will have three versions: a three-door hatchback, a five-door hatchback and a sedan. The model is expected to be launched in 2010, say sources close to the project.

Chery displayed a series of new models at the Beijing auto show in April, but this model was not included. "It's an all-new model," says a Chery source.

The company has hired Italy's Pininfarina S.p.A to design the styling of the new car and a Korean firm to undertake its engineering design, says a source familiar with the project.

Chery is currently awaiting the approval of China's Ministry of Environmental Protection to build a new plant on its existing premises to produce the new small car.

The plant will have annual production capacity of 200,000 units, says a report the ministry has posted on its Web site soliciting public comments on the environmental impact of the new plant.

Jin Yibo, spokesman for Chery, says Chery is not expecting any difficulty in obtaining the ministry's approval, but he declines to say when his company will start building the new plant.

Besides the domestic market, the model is also designed for overseas markets including the U.S. and Europe, says a Chery supplier executive.

But Jin declines to say which markets the new car will target.

At present, Chery is capable of producing 650,000 vehicles, 400,000 engines and 300,000 transmissions a year, says the company's Web site.

Early this year, Chery set up a joint venture with Israeli investment company Quantum to build Chery-designed vehicles for international markets. With annual capacity of 150,000 vehicles, the joint venture is slated to start production at the end of 2009 in a new factory near Chery's existing plants in Wuhu.

Last June, Chrysler and Chery signed an agreement to jointly develop, produce and distribute small cars under the Jeep, Chrysler and Dodge brands. Chery is also in joint venture talks with Fiat Auto S.p.A.