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DaimlerChrysler, Chery close to car deal: sources

By Fang Yan Fri Sep 29, 12:36 AM ET

SHANGHAI (Reuters) - Auto giant DaimlerChrysler AG (DCXGn.DE) is in detailed discussions with China's Chery Automobile to make cars for sale in the United States and other markets and could finalize the deal soon, sources said on Friday.
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"The two sides have explored various ways to make subcompact cars together and are now in advanced negotiations," one source familiar with the matter told Reuters.

An option being discussed is for Chery to provide the models and make revisions at the request of DaimlerChrysler (NYSE:DCX - news), while the cars would be made at Chery plants in China, the source said.

Funding for the project would be provided mostly by DaimlerChrysler, the source said, adding that models earmarked for the U.S. market would carry a Chrysler brand.

Another industry source confirmed that DaimlerChrysler, the world's fifth-largest car maker, and Chery were in late-stage talks on a tie-up, which might eventually lead to a full-fledged joint venture.

Other modes of cooperation are possible and it is not certain that a deal will be concluded, the second source said without elaborating.

Both sources said a decision was expected to be made within weeks. DaimlerChrysler and Chery declined to comment.

Chrysler Group chief executive Tom LaSorda said in Detroit on Monday that he hoped to name a partner by the end of the year to aid the division's push into the small car segment.

Chrysler currently has no offerings in the small car segment, which is growing in the United States and represents a larger share of sales in Europe and other markets.

Other candidates for the project include Japan's Mitsubishi Motors Corp (7211.T) and
South Korea's Hyundai Motor (005380.KS).

It was not clear whether the talks between Chery and DaimlerChrysler were exclusive.

Chery is among a handful of upstart Chinese vehicle makers, including Geely Automobile Holdings Ltd (0175.HK) and Great Wall Motor Co. Ltd (2333.HK), that are eager to push exports to diversify beyond their home market.

It has long eyed the North America market, the world's largest, via a venture with Maverick entrepreneur Malcolm Bricklin, best known for bringing the low-cost Yugo car to the United States.

Bricklin initially set a target of January 2007 for the first sales of Chery vehicles, but he told Reuters earlier this month that the launch could be delayed for the third time to 2009.

A potential tie-up with DaimlerChrysler could jump-start Chery's effort to crack the U.S. market and boost its global credibility, industry analysts said.

Chery aims to sell at least 30,000 vehicles outside China this year, mostly to developing nations, accounting for 10 percent of its total sales volume. [/b]
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IMO this is the last thing the North American automobile market needs. if this happens, way to go Daimler. :sarc:
 

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Source

IMO this is the last thing the North American automobile market needs. if this happens, way to go Daimler. :sarc:
[/b]
Yeah, who needs more jobs and efficient automobiles? This is America, dammit! :irate:

My company, a DCX supplier, has been sending engineers, quality specialists and metallurgists to China for the last several weeks. Do you suppose this is related? :sarc:
 

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Yeah. This sounds like a great idea. :sarc: We haven't had a good Yugo in the states in for awhile! :laugh:
 

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Yeah, who needs more jobs and efficient automobiles? This is America, dammit! :irate:

My company, a DCX supplier, has been sending engineers, quality specialists and metallurgists to China for the last several weeks. Do you suppose this is related? :sarc:
[/b]
How would this mean more jobs? Perhaps I misread your response, but if anything it would mean fewer jobs here. If it works well and DCX starts moving its North American manufacturing base East it will really mean fewer jobs. Granted I'm not a fan of the UAW, but I'm even less of a fan of losing even more of this country's manufacturing base.

My current employer supplies a few components to DCX as well, and to have them go to China instead would suck.
 

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How would this mean more jobs? Perhaps I misread your response, but if anything it would mean fewer jobs here. If it works well and DCX starts moving its North American manufacturing base East it will really mean fewer jobs. Granted I'm not a fan of the UAW, but I'm even less of a fan of losing even more of this country's manufacturing base.

My current employer supplies a few components to DCX as well, and to have them go to China instead would suck.
[/b]
When you say "them", are you talking about DCX or your components? More parts produced, no matter where they end up, is good for your company and mine. I'm not talking about moving operations. The employees I mentioned have not moved to China permanently.

The Big Three currently don't build a small car for sale in the U.S. - GM's are Korean - and having a car built in China with US-supplied parts is better than having a 0% domestic content.
 

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Once again, DCX leading the way in stupid decisions.
 

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When you say "them", are you talking about DCX or your components? More parts produced, no matter where they end up, is good for your company and mine. I'm not talking about moving operations. The employees I mentioned have not moved to China permanently.

The Big Three currently don't build a small car for sale in the U.S. - GM's are Korean - and having a car built in China with US-supplied parts is better than having a 0% domestic content.
[/b]
By 'them' I mean the components we ship to DCX, and by 'going to China' I mean 'resourced to China'. I agree that more parts produced by domestic manufacturers is obviously good regardless of where they go, but that's not what we're looking at here. What we're looking at here is DCX importing vehicles into the US from China, not DCX manufacturing Chinese-designed vehicles in the US (or with any domestic content, for that matter). Importing vehicles such as these would bight the sames of domestic not-quite-as-small vehicles like the focus (built in MI) and cobalt (built in OH) and thus further erode the US's manufacturing base. On the subject of sourcing components to China...you can be rest assured that if your corporation is sourced for parts that go to China they will only be doing so until a Chinese company reverse-engineers them and figures out how to produce them there.
 
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