Chrysler and Chery resume talks to build cheap cars in China
Carlos Ghosn recently said that Renault/Nissan is developing a $3K car with Indian partner Tata. Honda said it looked at the same idea, but that it couldn't build a car with Honda values for that money. Chrysler has put itself in the Honda camp, ruling out the creation of a $3K car with Chinese partner Chery. Instead, Chrysler is working on a two-tier system that will build basic, inexpensive vehicles for developing countries and full-fat premium cars for the US, Canada, and Europe.
Chrysler's tie-in with Chery was put on hold when DaimlerChrysler put Chrysler on the block. Now that everything is settled with Cerberus, Chery is ready to sit down at the table again. Nothing's been signed and no timetable has been announced, but it appears that Chery-built Dodges (and possibly Chryslers) could appear before the end of the decade. Still, Frank Klegon, Chrysler's exec VP of product development, said he couldn't get a car built for less than $5,000, even in China. In response to Renault and Nissan's plans to build a $3K car for the Indian market, Klegon said "I have seen what you and I wouldn't necessarily call cars."
[Source: Autoweek]
Reader Comments (Page 1 of 2)
John 4:40PM (7/04/2007)
Why do you have to make it a $3,000 car? Even $4,000 is fine. No need to squeeze that much. Considering right now in America the cheapest car is $10,999 I think a $7,000 dollar car that meets safety standards is low enough.
Too many automakers set rediculous goals and then when they can't meet them give up all together.
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Viv 4:59PM (7/04/2007)
As it says $3000 car is NOT FOR america. It's for developing nations like India where that is a lot of money.
Has nobody at Cerebrus watched the brilliance of the "Brilliance"? Spend your money wisely somewhere else guys.
Peter 5:49PM (7/04/2007)
No need to look at Brilliance. The Brilliance was a car the Chinese deemed fit for the European market. The stuff Chery builds is actully worse if you can believe that:
http://www.youtube.com/watch?v=4Swzbt76wBM
But don't worry, through such joint ventures we'll give them the know-how to build real cars, and they know how to churn them out insanely cheap. We're still laughing, but western car makers should start bracing for impact...
Drewboy 12:16AM (7/05/2007)
Peter, that crash test video just about made me sick.
I was hit at 55 mph right on the b-pillar in my '99 Dodge Stratus when I kid blew a red light. He was in a Chevy Blazer sized SUV, which broke my hip, and collapsed a lung. I had to have hip surgery a year later to correct it. All things considered though, I'm very lucky to be alive. I very strongly disagree with Chrysler's decision to partner with this company. I would never in my life buy a car from China, considering the things we've seen on this blog lately.
tekdemon 7:51AM (7/05/2007)
Peter, that video is somewhat misleading though since it shows an older Chery model, that's clearly based on late 1980's technology. None of the cars from that era did well in crash tests.
Seriously, how is that even any worse than this:
http://youtube.com/watch?v=lB0araA0T_k
And that's a much newer vehicle than whatever car that Chery is knocked off of. Jeez.
Racist Chinese-bashing drivel is starting to get really absurd on the comments in this blog. And picking a few of the worst-performing cars China has manufactured for these videos, while completely ignoring the fact that the Chinese didn't even come up with half these designs themselves, and ignoring the fact that everyone else was making cars equally unsafe just a few years ago is totally absurd.
Until you actually have a crash test of the cars that Chrysler is actually going to sell in the US, I would stop assuming that it's any less safe than whatever you're driving unless you drive a Volvo or something.
Peter 9:16AM (7/05/2007)
@tekdemon
But that's what I'm saying, sooner or later they will learn, not least through joint ventures like this.
Perhaps that Chery really isn't state of the art even by Chinese standards. But so far any Chinese car we've seen crash tested didn't fare much better...
Jamar 10:40AM (7/05/2007)
I *live* in China, and have never seen a car crash that bad here (the worst I saw was a Volkswagen, incidentally- never saw a Chery crash). Guess drivers here are more skilled and know how to avoid accidents (if you live here you'd know- depending on the other driver's temper and amount of damage to the car, you'd wish you died instead).
Egisto Soldi 4:57PM (7/04/2007)
2007, China's revolution in automotive: http://autoinsight.blogosfere.it/2007/07/la-cina-sta-rovesciando-il-mondo.html
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mr.ed 5:29PM (7/04/2007)
Is there an American alive who trusts the mainland Chinese to build an quality product anymore? Thgis deal is a big mistake. If they want offshore production, Korea's the place to go.
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Jhon 2:19AM (7/05/2007)
see http://hotshadow.com/Chrysler_and_Chery_resume_talks_to_build_cheap_cars_in_China.aspx
whofan 6:42PM (7/04/2007)
"Is there an American alive who trusts the mainland Chinese to build an quality product anymore? Thgis deal is a big mistake. If they want offshore production, Korea's the place to go."
Most of the products we buy outside soap are Chinese made sad but true. More in likely your television is made in China. Japans first entry in the US market was products of questionable quality including cars.
I believe we`ve made a deal with the Devil and its too late to turn back. Because its Chinese doesn`t mean all products are bad. I say buy American if you can even if its just in name. Our wealth is escaping us. We want to play in a global market we must have a national health care system to level the playing field. Trouble is no one has the will to do it. We at least should try to buy from an American company.
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Stoneman 8:47PM (7/04/2007)
Sorry but my money is on Japanese quality. I am tired with domestic crap. True, domestic quality has come up, but still nowhere near the Japanese level.
http://www.stonemanautoreview.com
Juvenille 7:25PM (7/04/2007)
They want to build a cheap cars for markets such as the India and China market, where cheap cars are demanded the most.
Remember, if this is executed wisely, meaning the car produced is at least decent and a good marketing approach is done, the profits of Cerberus can sky-rocket. It's not so important to build a quality car in order to make profits in markets like India and China, it's important to make it cheap and that's it.
More than 2 billion people live in China and India together which is about 1/3 of the overall world population, thus there are a lot of potential customers. Let's say only one percent of those two billion, decide to buy the car that Chrysler will make, one percent is 20 000 000 people buying 20 000 000 cars, which sums up to a lot of profit for Chrysler.
Remember what GM did, they re-badged Daewoo cars to Chevy in Europe. Most of those cars were cheap and crappy, but they met the demands of the specific markets, and those cars were easily sold to the customers, which brought great profits to GM. Even Russian Lada vehicles were also re-badged to Chevrolet bringing ridicilous models such as Chevrolet Niva (niva means farm in russian), a 4WD Off-road vehicle with a 1.8 engine, sold for only about 10 000$ offered only for the Russian market. Such products boosted GM's sales.
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wally 8:02PM (7/04/2007)
You guys are behind the deal was signed today!!!!
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I_Hate_China 8:50PM (7/04/2007)
Honda and Hyundai have explicitly stated that it was not any cheaper to build their cars in China, they are doing it only to avoid the 30% import tax on automobiles. Chinese brand cars are cheaper only because they use cheap steel, cheap defective parts, Euro-II level emission and skip on safety features. Once your Chinamobile has to meet the US and Eu regulations, it is no cheaper than contemporary Japanese/Korean cars, as evident by Brilliance's $20,000 BS6 due to arrive in America next year.
BTW, there is actually one place that builds EU-legal car for less than $5000 in the world, that's Kia's Picanto plant in Korea, the world's most efficient auto plant with 173 cars/worker a year.
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I_Hate_China 8:56PM (7/04/2007)
The three finalists for the Chrysler OEM deal were Chery, Hyundai, and Mitsubishi.
Mitsubishi could not meet Chrysler's cost demand and Hyundai declined the Chrysler OEM deal because they were running out of capacity to build their own models. Chrysler had no choice but to go to China.
Chery's probably losing money on this OEM deal, since Chery cannot build US and EU legal cars for $7000. This is nothing new, Chery's own low-end models are money losers too.
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AMGoff 12:32AM (7/05/2007)
Good Lord, some people simply astound me on here. If Chrysler sells these cars here do you think they will be somehow exempt from the US's safety regulations? That answer would be NO! I realize a lot of people like to speak before they think, but this one is a no-brainer. The fact remains that if Chrysler properly executes this whole thing and is able to undercut even the likes of Kia while giving a a good warranty then Auburn Hills will sell a boatload.
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I_hate_China 9:04AM (7/05/2007)
This is a simple OEM deal. Chrysler won't spend a dime to engineer those cars. They are rebadged Cherys and it is simple as that.
Chery has an ill-reputation for sacrificing quality to cut prices and stealing anybody's tech(even rival Chinese firms, not just foreigners) even in China.
What you are looking at is a shady car from an unethical business. Don't expect miracles.
AMGoff 11:47AM (7/05/2007)
So you mean that these cars won't have to pass US safety regulations? If so could you please explain to all of us why? I can understand that any quality materials will be lacking, but does anyone buying a $10K really expect to be getting that much?
Juvenille 4:28PM (7/05/2007)
AMGoff, Those cars are intended to be sold in the Chinese market, thus they won't need to pass U.S Safety regulations. They won't have to pass any regulations because I guess China doesn't have any.