Chrysler Severs Ties with Chery

Chrysler LLC has decided to end ties with Chinese partner Chery Automobile Co.

Mike Manley, Chrysler’s executive vice president of international sales and marketing, offered: “Both companies have since [signing the agreement] gone through major internal changes and evolution, resulting in different business directions and priorities versus a year ago.”

The disengagement is a setback to both companies’ previous plans in July 2007 to make small cars for sale around the world. Chrysler had wanted to use its partnership with Chery to develop a series of small cars based on the Chinese car makers designs and technology. The cars would be built in China, benefiting from low labor costs and sold globally under the Dodge brand. Bogged down by having operations based mainly in the U.S., Chrysler was seeking to outsource part of its business by partnering with Chery.

Without Chery, Chrysler will be trying other alternatives to developing a small-car lineup. For Chery, a state-owned company based in Anhui province and best known for its QQ mini car, the loss of a foreign partner also means the loss of technology sharing and the chance to have made a presence in U.S. and Western European markets.

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