Chrysler confirms 2-tier strategy for Chery vehicles

Rick Kranz
Automotive News
July 2, 2007 - 12:01 am

CHELSEA, Mich. -- Nissan's Carlos Ghosn talks about a $3,000 car.

But the best Chrysler can hope for from China's Chery Automobile Co. is a car that might sell for around twice that price.

Three thousand "is pretty low," said Frank Klegon, Chrysler's executive vice president of product development. "I don't know if I can get a $3,000 or $4,000 car out of China. Maybe, $5,000 or $6,000."

During an interview at a press event here last month, Klegon acknowledged what sources outside the company had been saying for months - that Chrysler is developing a two-tier vehicle strategy with its Chinese partner:

1. Low-tech, low-cost vehicles for such regions as Central and South America.

2. More premium vehicles for the United States, Canada and western Europe.

But while Chrysler expects to sell Chery-assembled vehicles before the end of the decade, the two automakers have yet to sign a contract, he said.

Chery halted negotiations when DaimlerChrysler announced in February that it was seeking a buyer for Chrysler. Cerberus Capital Management LP announced in May that it planned to purchase 80.1 percent of the Chrysler group.

"It is pretty much straightened out," Klegon said. Chrysler and Chery "are on a timetable for signatures, (but) we haven't signed all the stuff yet."

Klegon said Chrysler wants to market low-cost vehicles in South America, Latin America and other regions where emission and safety regulations are less strict. Still to be decided is whether the vehicles will be badged for Chrysler or Dodge.

"Over time, it could be both brands," Klegon said.

Klegon said a vehicle for the United States, Canada and western Europe will take longer to develop. Customers there demand a higher level of refinement and performance than customers in Central or South America who are motivated by price, he said. A time frame was not offered.

Last month, Ghosn told reporters after Nissan's annual meeting in Japan that Nissan and Renault are working on a $3,000 car for India's booming market.

Klegon said that hitting that price may depend on how "car" is defined.

He said that in India, "I have seen what you and I wouldn't necessarily call cars. They are three-wheel-scooter kinds of cars. They get people around, but they would be a little different than what you and I would consider when we first think what is a stripped-out car."