The first Made-in-China Chrysler cars, built by local
partner Chery Automobile Co., could reach the United States or Europe within 30
months, as ambitious Chinese rivals race to penetrate the world's big auto
Tom LaSorda, Chrysler Group President and CEO, speaks at the
signing of a cooperative agreement with Chery Automobile in Beijing July
4, 2007. [Reuters]
Ten-year old Chery, Geely
Automobile and Brilliance China Automotive Holdings already export to developing
markets, but have had little success in mature markets where competition is more
The two partners will develop, manufacture and distribute Chery-made small
and sub-compact cars in North America, Europe and other major automotive markets
under Chrysler brands.
The first exports will be a Dodge model, but will not be to the US or Europe.
"The first product within one year, and then into the United States and
Western Europe within two to 2- years," Chrysler Group Chief Executive Tom
LaSorda told reporters on Wednesday at a ceremony marking the strategic
Chrysler needs a partner to help develop small cars because of the cost of
designing, making and marketing a vehicle in a segment where prices and margins
are small, analysts said.
"I would say there are endless possibilities," said LaSorda. "We are looking
at multiple approaches," adding that volumes could be "maybe 50,000 or 100,000
and maybe more" depending on the region.
But like the Koreans and Japanese before them, the price
advantage enjoyed by Chinese exporters is offset by poor quality, outdated
design and the lack of brand recognition.
A Brilliance unit said last week the failure of its BS6 sedan to pass a crash
test in Germany was only a temporary setback and it still expected to sell
158,000 cars in Europe over the next five years.
Jiangling Motors Group's sport utility vehicle Landwind failed the same test
in 2005, fuelling doubts about the reliability of Chinese-made vehicles.
China, the world's second-largest auto market, last year became a net vehicle
exporter for the first time, but sales were mostly to South Asia, Africa and the
The Chrysler-Chery tie-up was first announced last year but was delayed
due to the sale of Chrysler by parent DaimlerChrysler AG to Cerberus
Chery, a medium-sized auto company based in eastern China, has posted fast
sales growth at home by offering a line-up of inexpensive vehicles, but must
convince European and American consumers it can build safe vehicles.
"Quality and safety are our main concerns," said Yin Tongyao, Chery's chief
With the Chery deal, Chrysler sees its sales outside North America doubling
over the next 4-5 years, as it branches out from the NAFTA region, its home
That development path has helped many local automakers expand rapidly to
where they now account for around a quarter of China's car sales -- a market
that roared ahead at 30 percent last year -- and could capture a 40 percent
share within four years.
Price will continue to be a key selling point for Chinese automakers.
Zhongxing Automobile is planning to export 50,000 pickups and SUVs to Mexico
this year as a springboard to break into the US market within two years. The
vehicles will on average be a fifth cheaper than comparably equipped brand-name