Chrysler Group President and CEO Tom LaSorda confirmed Thursday that his company had reached an agreement in principle with China's Chery Co to distribute Chery- made small vehicles in the global markets.

"Being able to partner with Chery represents a long-term solution to the challenges of how to profitably compete in the small vehicle segment," said LaSorda.

"This supply partnership is part of a new business model that is allowing us to introduce all-new products more quickly, with less capital spending. This announcement reflects the realities of a global industry and DaimlerChrysler's need to remain competitive in all segments," he added.

Chrysler Group officials said the Chery-made new vehicles, which will be sold under Chrysler Group brands, will attract new customers in two segments in which the Company does not currently compete: very young buyers and entry-level price-point buyers.

These small, low-price segment vehicles are especially important in more price- and fuel-economy sensitive markets, including Canadian, Mexican and most European markets.

"We already have a well-established relationship with Chery Automobile." added LaSorda. "Chery is the largest third-party customer of the Chrysler Groupz/BMW Group Tritec Engine joint venture in Brazil."

Chery has already adopted some of the most state-of-the art manufacturing processes. The level of technology adopted in their plant rivals that of many western automakers.

Chery is well on its way to becoming a world-class automaker, noted LaSorda, and meeting its goal to be the No. 1 Chinese automaker by 2010.

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