Chrysler Deal Could Bring Chinese Cars to U.S.

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Chrysler Group signs an agreement to have China's biggest automaker — Chery — make small cars for the U.S. market. The deal is the first of its kind for a major U.S. automaker.

RENEE MONTAGNE, host:

Detroit automakers continue to see declining sales. To try to cut costs, Chrysler has announced it will start making cars in China to export to American roads. Today, it signed a deal with Chery - China's fastest growing automaker.

NPR's Anthony Kuhn reports from Beijing.

ANTHONY KUHN: Chrysler chairman Tom LaSorda said today that Chrysler will export its first Chinese-made models to Latin America or Eastern Europe within a year.

Mr. TOM LaSORDA (Chairman, Chrysler): The Chrysler group has a long-term commitment to China. And as of today, we're committed to building vehicles here for export.

KUHN: China's Chery Company will make the cars, and Chrysler will modify them to meet local regulations and then sell them under Chrysler's brands. The deal was announced last year, then delayed as parent company, Daimler, sold Chrysler to Cerberus Asset Management Company.

Chrysler knows it needs to produce more fuel-efficient vehicles to cope with rising gas prices. Gas-guzzlers, including Jeeps and Dodge Rams, now make up 70 percent of its sales. Chrysler currently sells 90 percent of its cars in North America, and it wants to get in on fast-growing international markets.

Chery, meanwhile, is China's rising automotive star. Established just 10 years ago, it now makes about 350,000 vehicles a year and exports to more than 20 countries. China is now the world's fastest growing auto market. Chery's entry-level models are popular with first-time buyers, who make up 80 percent of the Chinese car market.

With all the recent media coverage of substandard Chinese food, drug and toy imports, some consumers are bound to be skeptical at first about buying a Chinese-made Dodge. But that won't change the fact that fuel-efficient compact cars and consumers in developing nations will be the hot growth segments of the auto market for some time to come.

Anthony Kuhn, NPR News, Beijing.

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