Chrysler, Chery To Meet in Mich.

Representatives of Chery, the Chinese automaker, which is supposed to build Chrysler-branded small cars, will be in Auburn Hills this week to talk over various aspects of the deal.

Chrysler offered no details about the agenda for the meetings but they could include the first concrete discussions between Chery and Cerberus Capital Management, which earlier this month submitted the winning bid for the Chrysler Group, which is being sold by DaimlerChrysler AG.

Under the provisions of Chrysler's so-called transformation plan, the partnership with Chery is expected to provide the company with new, small vehicles and help it gain access to other markets, particularly inChina. Chrysler has said it expects its international sales to grow rapidly following the separation from DaimlerChrysler, which is now expected to be complete this fall.

Tom LaSorda, Chrysler Group president and chief executive officer, also suggested Chrysler could even expand its ties with Chery if the joint venture now in the works proves productive.

DaimlerChrysler AG's board of supervisors approved the link-up with Chery this past winter over the vocal objections from both German and American union representatives on the board.

Chery representatives are now denying recent reports in German press that is thinking of re-examining the deal with Chrysler in light of the sale to Cerberus Capital Management. The reports originally appeared last week in the respected German financial daily Handelsblatt, Chrysler officials noted. Chrysler officials also minimized the significance of the Handelsblatt article, noting Chery officials later repudiated the statements that had appeared in the German paper.

However, a Chery official identified by name in the article had said the deal with Cerberus came as a “total surprise'' for his company and it had not yet talked with representatives of the New York private equity fund, which is about to become Chrysler's new owner.

“We continue to be in talks with Chrysler, but we don't have any contact with the new owners yet,'' the Chery officials told Handelsblatt reporters.

The deal with Chery still has not been finalized, Chrysler officials acknowledged last week. However, the delays have been the result of an extensive review by the Chinese government, according to Chrysler spokesman David Elshoff. Once the master agreement is approved by the government of the Peoples’ Republic of China, Chery and Chrysler will have to negotiate specific project agreements that will cover the development and production of specific vehicles.

LaSorda personally spent a substantial amount of time last years, discussing specific projects with Chery executives. The objective is to have Chery build a small "B-class" subcompact vehicle that could be sold under the Chrysler and Dodge brands in North America and Europe.

LaSorda has said the new small car could prove invaluable to Chrysler's ongoing efforts to woo younger buyers to the Dodge and Chrysler brands and bolster its position in the subcompact market niche, which has expanded as gasoline prices have increased over the past couple of years.

The small cars from Chery also could serve as a hedge against further increases in the price of gasoline in future, Chrysler officials have suggested.

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