Wednesday, July 04, 2007

Chery Chryslers

That was quick (emphasis in red; remember this?; see also here and here and here and here):

“Chrysler Group will introduce a Chinese-made small car in the US next year that retails for about half the price of its cheapest model, as it seeks to win back market share from Toyota Motor Corp and Honda Motor Co.

The carmaker will begin selling Chery Automobile Co's A1 hatchback in the first quarter of next year, Chery president Yin Tongyao (尹同耀) said in Beijing yesterday. The 1.3-liter A1 is priced from 53,800 yuan (US$7,100) in China. Chrysler's least expensive US model is the US$13,850 Dodge Caliber, according to

Yin didn't say how much the A1 would cost in the US.

Chrysler, set to be the first US automaker to import cars from China, also plans to close a plant at home after reporting a loss last year and slipping to fourth place in US sales. Working with Chery will allow the company to add models able to compete with Toyota's Yaris with less investment.

This is the start of a very long relationship between Chrysler and Chery,’ Chrysler Group president and chief executive Tom LaSorda said in a statement yesterday.

‘Chery's participation in this agreement and their focus on small and sub-compact cars will have a nearly immediate effect on Chrysler Group's offerings in the small-vehicle segments,’ LaSorda said.

‘This strategic partnership is part of a new business model that is allowing us to introduce all-new products more quickly, with less capital spending,’ he said.

Chrysler plans to sell current and future Chery models worldwide. Chery may eventually build as many as 100,000 vehicles a year for Chrysler, Yin said at a signing ceremony yesterday, without providing a timeframe.

The capacity can also be expanded in future, he added.”

Yale Zhang, director of Greater China vehicle forecasts for consultancy CSM Worldwide (Shanghai) Ltd, said, as politely as possible:

“It could be unprofitable for Chrysler to develop small cars on its own.”

A company like Chrysler loses money on most of the cars it makes, and particularly on the cheaper ones.  If it can reduce its manufacturing cost to the extent that it can sell a car in the United States for half of what it is selling its cheapest cars for now, how long do you think it will take for it to move all its manufacturing to China?