Even as the German media started
publishing reports that the Chinese
major Chery Automobile Co had halted
the framework deal with
DaimlerChrysler AG to build
Chrysler-branded cars, the Chinese
firm has confirmed that the deal is
on.
One of the German papers had reported
that Chery Auto, which had reached an
initial agreement with Chrysler last
year, was looking to re-examine the
deal. Chery’s move, according to the
paper, came after DaimlerChrysler
agreed to sell off its loss-making
Chrysler Group to private equity firm
Cerberus Capital Management for $7.41
billion.
Meanwhile, Chery clarified this week
that the reports had misquoted an
official of the company. The company
clarified that the deal with Chrysler
Group was progressing. It may be
recalled that in late December, Chery
had worked on a deal to build small
cars under the Chrysler badge for sale
in Europe and the US. This deal would
be paving the way for the ambitious
Chinese auto maker to sell its
own-brand vehicles in mature markets
eventually. However, though the
reports went ahead and said that the
deal may be off, Chery declined to
elaborate on the status of that deal.
Chery had made 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. With the
deal, this might change.
The deal needs Chinese government
approval. If the deal comes through,
both Chery and Chrysler stand to gain
a lot. The deal would mean that Chery
would get the the quickest and safest
way to tap the US. And for Chrysler,
it would mean that it would be able to
enter the small car segment.
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