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Some Chrysler group dealers will get a small car under a letter of intent signed by CEO Tom LaSorda with Chinese automaker Chery Automobile Co.
The agreement still has to be approved by the DaimlerChrysler supervisory board, which meets in January, and the Chinese government, according to Chrysler spokesman Jason Vines.
With the expected approvals, manufacturing would begin soon "in automotive terms," Vines says.
The cars will carry an unannounced Chrysler group brand name, but Dodge is a logical choice as the group's value brand. Chrysler showed a small-car concept, the Dodge Hornet, at the 2006 Geneva auto show in March.
The smallest cars Chrysler now makes are the Dodge Caliber and Jeep Compass, one step up from a Hornet-sized car.
The new car would compete with the Toyota Yaris, Chevrolet Aveo, Honda Fit and Nissan Versa in the United States.
Chrysler has said it cannot profitably produce a small car in the United States. Negotiations with Chery started about a year ago. The cars would be sold in the United States, Canada, Mexico, Europe and possibly China, Vines says.
The Beijing Morning Post quoted Chery spokesman Wang Wei as saying, "We will formally release the details (of the deal) in one month, if not earlier."
The state-controlled China Development Bank approved a loan of 5.8 billion yuan ($743 million) to Chery last week, according to the Chinese newspaper. The government is trying to encourage the development of China's own automotive brands.
State-owned Chery, based in Anhui province, is China's largest domestic automaker.
Chery sold a modest 189,158 vehicles in 2005, but it grew substantially in 2006 as China's growing middle class turned to its specialty: small, economical cars.
For the last two years, Chery has been negotiating with U.S. entrepreneur Malcolm Bricklin to develop cars for sale in the United States. Negotiations with Bricklin ended in late 2006.
But Chery is still intent on exporting its own brand to the United States.
Meanwhile, it has been expanding its production capacity in the city of Wuhu for its own export brand and for the Chrysler deal. Chery has hired various Western engineering companies and parts suppliers so that its cars will meet safety, emissions and consumer standards in Europe and the United States.
Source (Autonews)