There was some confusion on Thursday surrounding reports that China’s Chery Automobile will launch its A1 model, its first collaboration with Chrysler, at the Shanghai motor show in April.

Citing a statement from the automaker, the official Xinhua News Agency said the A1 would be the first of at least six small vehicle models to be manufactured by Chery with the cooperation of Chrysler under their collaborative production plan for small vehicles.

DaimlerChrysler can have any model they think is suitable for sale in US and other markets,” Chery spokesman Wang Wei told Bloomberg News. “Chery’s compact cars will be cost competitive in the US market,” he added.

But Chrysler spokesmen are insisting they have not yet announced their choice of model, and are talking only of a single model, not a half dozen.

“We are moving forward in cooperation with Chery,” Beijing-based DaimlerChrysler spokesman Trevor Hale told Bloomberg. “It’s too early to name which model we’ll export.”

His position was echoed by Chysler corporate spokesman Mike Aberlich who told just-auto from Detroit today that the issue was still under discussion. “We know what model it will be but we haven’t announced it yet.”

Aberlich added that he had heard reports of Chery building cars for Chrysler to sell in China but that was not the case – the framework of the deal calls for Chrysler to sell Chery-built cars in North America and Europe.

Bloomberg noted that Chery vehicles would be the first Chinese-made cars sold by a major automaker in the US, the world’s largest car market.The A1 is an updated version of the Chery QQ subcompact, known as the ‘Chinese Beetle’, with a 1.3-litre petrol engine designed to run at a top speed of 156 km/h. The new car, aimed at younger customers, is expected to sell for 40,000 to 65,000 yuan (5,000 to 8,125 U.S. dollars) on the Chinese market.

Ironically, the QQ has been the subject of a dispute between Chery and Chrysler’s Detroit rival General Motors, which claimed that the QQ was a copy of its South Korean GM-Daewoo unit’s Matiz/Spark model. The Spark is built and sold as a Chevrolet in China by a local joint venture with GM.

Chrysler had previously reached an agreement with Chery to distribute the Chinese automaker’s small vehicles internationally to tap the small vehicle sector in the US more quickly with less capital spending.

The new model will probably be sold under the Chrysler brand, Dodge, in the North America market, Shanghai Securities News reported.

“Chrysler is trying to improve its product lineup with Chery small cars,” CSM Asia analyst Huang Zheruitold Bloomberg, adding: “But it will take a long time to see gains from this sector as small cars aren’t very popular with Americans.”

Established in east China’s Anhui Province in 1997, Chery is one of the few Chinese companies that successfully produce their own models rather than manufacturing foreign brands under licence.

The company was the country’s seventh largest auto maker and fourth largest producer of sedans in 2006. It exported over 50,000 vehicles last year, up 178% over the previous year.

The company expects the car to compete in export markets with Nissan’s March/Micra [not sold in the US though Nissan does have a larger Mexican-made compact called Versa] and Toyota Motor’s Yaris [which is on sale in the US, closely rivalling the Honda Fit/Jazz which is also made in China and exported to some European markets].

In China, the A1 will also challenge General Motors’s Aveo, Citroen’s C2 and Changan Automobile Group’s self-designed Swift, according to the Bloomberg report.

“Rising fuel costs are making compacts more popular worldwide,” Chery’s Wang told the news agency. “The A1 will also be sold in Europe.”