Chrysler-Chery: Another Divorce in the Making?
May 22, 2007

A German newspaper reports that, in light of Chrysler’s sale to Cerberus Capital Management, China’s Chery Automobile Co. wants to reexamine the deal it struck with DaimlerChrysler to build small cars for Chrysler in China for export to North America and Europe.

Handelsblatt quotes Chery General Manager Zhang Li as saying the company wants to renegotiate with Chrysler because of the sale and that Chery has not talked with the new owners yet.

Chrysler and Chery have a framework agreement, but negotiations around specifics, including the small car discuss, have not been hammered out. Only last week, Chrysler CEO Tom LaSorda, in his first press conference after the sale to Cerberus, said he expected the deal with Chery to proceed, but that Chrysler was interested in expanding the deal with Chery beyond the original framework.

A negotiating session between Chrysler and Chery, previously scheduled, is set for next week.

A Chrysler spokesmen said that Chery was concerned when Chrysler was put up for sale in February, but that Chrysler is confident negotiations will be back on track. The deal was blessed by the DaimlerChrysler board but has been awaiting approval from Chery and the Chinese government.

DaimlerChrysler and Chery announced they’d made an agreement in December. The deal would make Chrysler the first major carmaker to sell Chinese-built cars in the U.S.

The plan called for Chery to produce a subcompact for Chrysler to sell in North America and Europe as a Dodge in 2009.

Chery is one of the fastest growing automakers in China and has made no secret of its global aspirations. It considered a venture with entrepreneur Malcolm Bricklin and has an agreement with Italy’s Fiat.

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