Thursday, July 5, 2007

Disappointing state of affairs for the U.S.

I hate to say it right after the 4th of July festivities, but this disappoints me to no end. Have we priced ourselves right out of the US car market. It is hard to find a decent American made new car for under $25,000. If China is able to cost effectively build a quality auto and sell it here for $10,000-$20,000 this could be the beginning of the end for US auto manufacturing (actually may have passed the beginning already). Quality issues including numerous recalls plague US auto manufacturing. Sadly, one of my last two auto purchases happened to be my first foreign auto purchase. I was looking for a low cost, quality, gas miser car. The model I was looking at from Ford was riddled with recalls, Chevy's option was poor all around, I ended up with Hyundai and it has given me 135,000 almost trouble free miles. Chrysler, Ford, GM lets step it up a bit...I want to buy American but with limited money, I have to get the most bang for my buck.

Anyways, read this article and comment...

Chrysler, China's Chery sign deal to export Chinese cars to United States

Associated Press WorldStream via NewsEdge Corporation :

BEIJING_The next Made-in-China export bound for the United States: cars.

Chrysler Group signed a deal Wednesday with China's biggest automaker, Chery, to launch a low-cost production venture that could export the first Chinese-made cars to the United States.

The first cars will reach Latin America or Eastern Europe within a year and models should be exported to North America and Western Europe in 2 1/2 years, said Chrysler CEO Tom LaSorda.

"As part of the Chrysler Group's global transformation, we are finding new ways to bring vehicles to market faster, more efficiently and with less cost," LaSorda said at a signing ceremony.

The alliance offers 10-year-old Chery Automobile Co., based in the eastern Chinese city of Wuhu, an opportunity to realize its longtime ambition of entering the U.S. market.

Chinese automakers already export, mostly low-priced trucks and buses shipped to Africa and other developing markets. But analysts say they lack the technology to meet U.S. and European safety and pollution standards on their own.

Chery CEO and Chairman Yin Tongyao said the deal will help Chery improve its skills as it tries to expand foreign sales of its own models.

"Chery is still young, so we should learn from Chrysler and improve our own competitive edge in the near future," he said, calling LaSorda "my teacher in the automotive business."

The first Chrysler-Chery export will be based on Chery's A1 compact and sold under the Dodge brand, LaSorda said.

A 1.3-liter version of the A1 retails in China for 53,800-59,800 yuan (US$7,100-US$7,900; €5,200-5,800). Export prices have not been announced.

The companies will jointly develop future models, probably with Chrysler styling on a Chery platform, LaSorda and

LaSorda said he had "no concerns at all" about convincing U.S. consumers that Chinese-made cars are safe at a time of warnings about seafood, tires and other goods imported from China. Chrysler will work closely with Chery to ensure the cars meet U.S. and European safety and emissions standards, he said.

The agreement follows DaimlerChrysler AG's agreement in May to sell 80.1 percent of money-losing Chrysler to U.S. private equity group Cerberus Capital Management, freeing the parent company to focus on its truck and Mercedes luxury car lines.

Major automakers have been aggressively expanding production in China, which overtook Japan last year to become the world's No. 2 vehicle market after the United States. But until now, most has focused on meeting red-hot local demand, which has made China a bright spot for U.S. automakers amid lackluster sales at home.

Others also have announced plans to export Chinese-made cars to the United States but none has yet made it to market.

A Chinese automaker, Changfeng Motor Co., said in January it hoped to sell sport-utility vehicles in the United States within two years but has given no details. Chery had a deal with American entrepreneur Malcolm Bricklin to sell cars in the U.S. market but that fell through.

Japan's Honda Motor Co. has exported Chinese-built Jazz subcompacts to Europe since 2005.

Last year, Chery reported sales of about 310,000 cars, with 40,000 of those exported. Its target this year is 390,000 cars, including 70,000 units sold abroad.

The company assembles vehicles with partners in Iran, Malaysia, Russia, Ukraine, Brazil and Egypt. It announced plans in March to open a factory in Uruguay _ its first in Latin America _ with an Argentine partner.

Total Chinese passenger car sales rose 37 percent last year to 3.8 million, while total vehicle sales rose 25.1 percent to 7.2 million, according to the China Association of Automobile Manufacturers. LaSorda said Chrysler picked Chery after looking at potential partners in Europe and Asia.

"We researched the world and found they were the best," he said.

Asked whether Chrysler was worried that the alliance might help Chery develop into a competitor that might threaten its U.S. partner, LaSorda told The Associated Press, "No, we're not. With us or without us, they're going to grow. So the question is, 'Are you going to go with a winner?'"

The venture's production could reach several hundred thousand units a year, LaSorda said.

"This is the start of a very long relationship between Chrysler and Chery," he said.


On the 'Net:

Chery Automobile Co. (in Chinese):

Chrysler Group:


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