Chrysler Aligns With China's Chery Automobile

In a deal that could be a trend-setter for the U.S.' Big Three automakers, Chrysler Group inked a deal Wednesday with Chery Automobile of China. Outsourcing the assembly of some of its vehicles to China could bring more affordable and profitable cars to the U.S. and Europe by the end of 2009. The initial Chrysler-Chery vehicle will be branded a Dodge and will be based on Chery’s A1 compact (pictured), which fetches between $7,100 and $7,900 in China. Export prices have not yet been announced. The alliance would be the first time ever Chinese-made automobiles were imported to the U.S. Chery CEO and Chairman, Yin Tongyao, believes the deal will also assist in boosting foreign sales of its own models, which currently do not pass U.S. and European safety inspection standards. German-owned Daimler recently sold its North American Chrysler Unit to Cerberus Capital Management after several billion-dollar loss quarters. Chinese auto workers earn an average of $0.83 an hour, versus an average of more than $70 for U.S. auto workers.

Sources: Wall Street Journal, AP, MarketWatch, Globe and Mail
Commentary: Chrysler, Chery Make It Official, First Cars To U.S. By 2009 • Big Three Automakers Lose Ground to Japanese in June • Upcoming UAW Negotiations 'Do or Die' For Detroit's Big Three
Stocks/ETFs to watch: DaimlerChrysler (DCX). Competitors: General Motors (GM), Ford (F), Toyota (TM), Honda (HMC), Nissan (NSANY), Tata Motors (TTM)
Conference call transcripts: DaimlerChrysler Q1 2007 Earnings Call Transcript

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