Chery Makes Chrysler Cars in Trouble

In July 2007, Tom LaSorda, Chrysler CEO at the time, touted a deal in which Chery Automobile Co. would supply Chrysler with small cars for North America.
 
Today, neither Chrysler nor Chery are commenting on the deal, originally scheduled to start bringing cars to Mexico this year. And a source in China says it looks dead -- or at least on the back burner.
 
"I wouldn't place much hope on it," says a former Chery executive familiar with the Chrysler deal. "Both companies have their own problems to deal with, and both have run out of money."
 
He says the substandard quality of Chery's cars was a major obstacle.  "Chery knows there is no way for these cars to meet the safety and emission standards of the U.S. market in the near future."
 
Chrysler and Chery never said when Chery-made cars would arrive in U.S. showrooms. In a May interview with Automotive News, LaSorda's said plans for the U.S. showrooms were encountering difficulties.
 
"We need small cars," LaSorda, now co-president of Chrysler, said. "Chery's cars are still not ready for that exposure into these markets." He said China-built cars probably won't be ready to meet U.S. safety and emissions standards for "three years or more."
 
Plans to also bring Chery-made cars to Mexico for Chrysler are also on hold, says the former Chery executive.
 
On Thursday,Chery spokesman Jin Yibo, said: "We have no further information to release at this stage."
 
"We're not aware of any change to the status to our relationship with Chery," said David Elshoff, Chrysler spokesperson in Detroit.
 
China's slowing auto market is hitting Chery hard, and sources say it is laying off employees and freezing development of some news models.
 
A Chery supplier, who declined to be identified, said Chery is cutting sales targets by at least 50 percent for the second half of this year.

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