Motor Vehicles and Parts News
- Deal with Chrysler not halted: Chery
Date: 25-May-2007 Sources: (Shenzhen Daily)
CHERY Automobile Co. said a framework deal with DaimlerChrysler AG to build Chrysler-branded cars was still proceeding, denying a German paper report it had been halted.
Chery, which reached an initial agreement with Chrysler last year, wants to re-examine the deal, the Handelsblatt newspaper said, citing a senior Chery executive.
The decision, the paper said, came after DaimlerChrysler agreed last week to sell its money-losing Chrysler Group to private equity firm Cerberus Capital Management in a US$7.41 billion deal.
But a Chery spokesman said Wednesday that the newspaper had misquoted his colleague and that the earlier deal with Chrysler Group was progressing.
Under the agreement unveiled in late December, Chery would build small cars under the Chrysler badge for sale in Europe and the United States, paving the way for the ambitious Chinese automaker to sell its own-brand vehicles in mature markets eventually.
The Chery spokesman declined to elaborate on the status of that deal, which still needs Chinese Government approval, or confirm whether Chery wants to renegotiate the terms with Chrysler's new owner.
'I don't think the deal will be called off,'said George Magliano, director of North American auto industry research at Global Insight.
'There's a lot riding for both Chery and Chrysler in this,'he said, noting that this would be the quickest and safest way for the Chinese automaker to tap the U.S. market, while Chrysler needed a small car.
Chery, a mid-sized but fast-growing player in eastern China, had made some inroads in emerging markets in Southeast Asia, Africa and the Middle East, where pricing remains a critical factor to push sales.
However, it has had little success so far in breaking into mature markets in the United States or Europe.
Chery sold 28,171 cars in April, bringing its sales this year to 117,732 units. Its China market share surpassed Nissan, Toyota Motor Corp. and Honda Motor Co.
The company plans to increase 2007 sales by 29 percent to 393,000 units, compared with last year's 60 percent increase. Production may exceed 400,000 units this year.
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