Chrysler group president and CEO Tom LaSorda on Thursday day confirmed that his company had reached an agreement “in principle” to distribute Chery-made small vehicles in the NAFTA region, European region and possibly other global markets.
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The agreement is subject to the approval of the DaimlerChrysler supervisory board and Chinese authorities, the automaker said.
“Being able to partner with Chery represents a long-term solution to the challenges of how to profitably compete in the small vehicle segment,” said LaSorda. “This supply partnership is part of a new business model that is allowing us to introduce all-new products more quickly, with less capital spending. This announcement reflects the realities of a global industry and DaimlerChrysler’s need to remain competitive in all segments.”
Chrysler Group officials said the new vehicles, which will be sold under Chrysler group brands, will attract new customers in two segments in which the company doesn’t currently compete: very young buyers and entry-level price- point buyers. These small, low-price segment vehicles are especially important in more price- and fuel-economy sensitive markets, including Canadian, Mexican and most European markets.
LaSorda noted that, although historically Chrysler Group has been the most reliant upon trucks, minivans and sport-utility vehicles, it is now moving quickly toward smaller vehicles.
LaSorda added that small cars are playing a major role in his company’s international growth. The Dodge Caliber has already become the group’s No. 2-selling vehicle (behind the Jeep Grand Cherokee) outside North America.
“We already have a well-established relationship with Chery Automobile,” added LaSorda. “Chery is the largest third-party customer of the Chrysler Group/BMW Group Tritec engine joint venture in Brazil.”
Since 2004, Tritec 1.6-litre engines have been exported for use in the Chery A15 and Fengyun.
Chrysler designers will work with the Chinese automaker on the new small vehicles, which are based on yet-to-be-announced platforms, to create unique Chrysler styling. DaimlerChrysler engineers will also work closely with Chery to ensure the new vehicles meet all applicable safety and emission standards in markets where they’re sold.
Chrysler claimed Chery has already adopted some of the “most state-of-the art manufacturing processes”.
“The level of technology adopted in their plant rivals that of many western automakers. Chery is well on its way to becoming a world-class automaker,” noted LaSorda, and meeting its goal to be the No. 1 Chinese automaker by 2010.
Founded in 1997, Chery is China’s largest exporter of domestically made vehicles.
