Chrysler Could Be First With a Chinese-Built Car

Chrysler Could Be First With a Chinese-Built Car

As expected, DaimlerChrysler’s supervisory board gave the green light to its Chrysler Group, allowing it to move forward with a plan to develop and build small vehicles with China’s Chery Motor. That means Chrysler could become the first automaker to distribute Chinese-built vehicles in the United States.

Under the approved framework of an agreement –- one that excludes an equity partnership -- Chrysler brands would be able to distribute Chery-built vehicles primarily in North America and Western Europe.

Chrysler said the partnership with Chery would allow it to develop much needed small vehicles more quickly and with less money.

Chrysler desperately needs a small car for North America and foreign markets, where it has ambitious plans to increase sales to offset lower sales in the U.S. Especially important are price- and fuel-economy-sensitive markets, Chrysler said in a statement. Currently, Chrysler has no vehicle to compete in the B segment, among the highest volume in overseas markets, and starting in the $10,000 range. That market accounts for 67 percent of sales in overseas markets, Chrysler said. At the moment, Chrysler's smallest vehicle is the Dodge Caliber crossover, considered a C-segment model that starts at around $13,000. 

Chrysler is slow to forge such a partnership. Its major competitors in the U.S. and Western Europe have similar arrangements with Asian manufacturers, though typically not Chinese ones, for vehicles in these segments. General Motors, for instance, uses its Korean-based Daewoo to develop small vehicles for world markets, including the U.S.

At the Geneva Motor Show last March, Chrysler introduced the Dodge Hornet concept (pictured). An intriguing and innovative B-segment car, the Hornet features tiny overall dimensions and a small engine in keeping with European sensibilities but with all-American -- Dodge -– styling as well as a roomy, flexible interior space.

As it introduced the Hornet in Geneva, Chrysler put out the word that it was shopping for a partner to build a small vehicle like the concept, because it could not produce a small-vehicle profitability on its own. Volkswagen, for which Chrysler will build a minivan for North America, was rumored as a candidate, but so, too, was China’s Chery, which has ambitious global intentions and is hungry for a foothold in the U.S.

In December, Chrysler announced a proposed deal with Chery, but it was contingent on the supervisory board’s approval. The deal still requires approval by the Chinese government. The final agreement on the framework for the deal is expected to be signed by the end of March, Chrysler said.

No word on if the Chrysler-Chery deal will include production of the Hornet.

Chrysler said the partnership would allow the company “to become a bigger player on the global automotive stage by giving it access to products in new segments more quickly, with less capital spending.”

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.