Chrysler, Chery Building Minicar

2006 Dodge Hornet concept. Geneva Motor Show

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The Chrysler Group has completed a deal withChina's Chery Automotive Co. to build a new small car for sale in the United States within the next 24 months.

Jason Vines, the vice president of communications for the Chrysler Group, said the small Chinese-made car produced by the new DaimlerChrysler-Chery venture will be retailed under the Dodge, Chrysler, or Jeep brand names, all belonging to the Chrysler Group. "It will be a Chrysler Group brand," he said.

The exterior and interior designs of the vehicle will originate with the Chrysler Group but Chery is expected to provide some of the basic engineering required to get the new vehicle or vehicles into production. Chrysler officials said.

Vines said the letter of intent for the venture was signed two weeks ago and must now be approved by the DaimlerChrysler supervisory board, which includes representatives from the company's labor unions in both Germany and the U.S.

Tom LaSorda, Chrysler Group president, has said during recent interviews the Chrysler Group needed a small, subcompact model to round out its model line in the U.S. , where consumers are showing a growing interest in small cars.

However, Chrysler does not believe it could build a profitable small car in the U.S. and thus had decided to look for a partner in China where the automobile industry has grown rapidly in the past 15 years and labor costs are a fraction of what they are in North America and Europe.

Negotiations with Chery intensified this fall after the Chinese automaker ended its relationship with automotive entrepreneur Malcolm Bricklin, who first proposed two years ago to bring a Chinese-made automobile to the U.S.

"Tom said he wanted the deal done by the end of the year and it was," noted Vines, who said LaSorda had handled the negotiations personally.

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