Chrysler's Chinese Gambit

Chrysler is showing signs of desperation. The company signed its second deal with a Chinese carmaker in recent months—this one one apparently aimed at filling the company’s void of small, fuel-efficient cars as quickly and cheaply as possible. The partnership with Great Wall Motor is vague in its goals and expectations. The companies will explore long-term business ties in “distribution, components and technology.”

That could mean more Chrysler models being built in China—they already make four there but sell 12 models right now—rather than bringing any Great Wall products to the U.S., since, like Chrysler, Great Wall specializes in trucks and SUVs. Some of Great Wall’s engines might be useful in adding low-cost, fuel-efficient power to future products, but that would have to be weighed against the cost of making them emissions-compliant.

Another route might be using Great Wall to speed development of alternative propulsion and fuel technologies, helping Chrysler to cut down on its three-to-five year prediction of how long it will take to get a significant number of hybrids on the market. Like Chrysler, Great Wall is privately held, which also gives it more flexibility in working on such projects.

Last year, Chrysler signed a deal with another Chinese automaker, Chery Automobile, to jointly produce small cars—which the company needs to fill the lower end of its product lineup. Right now, the smallest Chrysler model is the Dodge Caliber, a 3000-pound compact car that tops out at 29 mpg highway with its 1.8-liter 4-cylinder engine. Chery and Chrysler are jointly developing and marketing small cars for some overseas markets, but have been silent as to when any of the products will be available in the U.S.

Chrysler can use the cars as soon as Chery proves that it can produce a quality and style of small car capable of making it in the American market. This is a genuine issue, because pure price and size will not move iron, even in this hot market for small cars, as GM found out with its dowdy Daewoo-built Aveo.

Chery also has hybrid technologies ready to go. The company has shown prototypes, and half of its cars will be hybrids by 2010.Bringing over some of that technology—even if it is adapted to existing Chrysler product—would advance the company beyond its announced plans, which will leave it squarely in last place among the major American automakers.


  • Aggieland

    Chrysler is shooting themselves in the foot. I appreciate the fact that they’re trying to make smaller, more fuel efficient cars quickly (and cheaply), but anything made in China is crap. The Chinese just don’t care.

  • NOMAD

    Another nail in the coffin of North American economy.
    As long as we keep importing product without manufacturing at home, we are burying ourselves.

    The chinese, especially, have taken over some countries by swallowing up their economies and we’re well on the way.

  • circlecube

    The American companies don’t realize that we are the consumers here in the US and if jobs go overseas, then who will buy thier products!

    Pretty soon we won’t be able to afford anything without US jobs.

  • Old Bald Guy

    40 years ago there were 2 kinds of cars you could get in the USA … large, nice to have (I want) cars … and small, nice to have (I want) cars.

    The large cars were American made and the small cars were not … It’s not that there weren’t any small American cars, it’s that the small ones were cheap crap … none with the nice options you could get on big American cars.

    Then came the oil embargo in 1973 and American drivers discovered small, nice to have (I want) cars … made in Japan and Europe. Detroit took a hit … but didn’t take the hint. For the next 3 decades, they kept pumping out what THEY insisted we wanted … big, bloated, and gas guzzling cars.

    Guess what Detroit? It’s crunch time again and you still haven’t figured it out. Quality … and small … and fuel efficient … are terms used on Japanese cars – not Detroit bloat.

    Maybe one of the big three US car makers will have to go bankrupt before the other makers get the hint.

    I like the idea of MADE IN AMERICA … I also like to drive a quality, fuel efficient car that is smaller than my house. Of course, with Toyota, Honda, VW and others making their cars here in America … I can still drive a car MADE IN AMERICA.

  • TD

    What happened to fuel economy in cars in the last decade?

    I currently drive a 1996 Oldsmobile 88. I get 21-22 mpg in town and 30+ on the highway!! My car has a the venerable 3.8L V6 which is also an extremely reliable engine. Chrysler can’t get 30 mpg out of a 1.8L 4 cylinder? Its like car manufacturers are purposely trying to make their engines get poor mileage.

  • bad capitalism

    before blaming chinese taking away your jobs, please bear in mind that made in china goods have helped US to control the inflation for almost 20 years. capitalism always pursues maximum profit, if the wage and other cost here is too high, no one can prevent manufacturers from moving to India or China.

  • Need2Change

    I agree with ALL the previous comments. There’re right on.

    Unfortunately, Chrysler can’t afford or can wait 5 years to develop new, desirible models. China cay be able to provide, small effient models.

    Hopefully, thisis a short term fix, and Chrylser can get its act together in relation to its current models.

    Chrysler needs to modernize the PT Cruiser.

    The full size cars need to lose 500 lbs. (300, Charger, Challenger, etc.) and gain inovative engines.

    The midsize cars need to lose 300 lbs, and add quality touches

    There needs to be a full-frame truck that weighs liess than 4,000 lbs.

    There needs to be a uni-body truck weighing about 3,000 lbs.

    There needs to be a short-wheel base mini-van that weighs less than 3,500.

    Just my 2 cents.

  • Bryce

    Well, it is good that Chrysler is partnering up with an overseas brand to have them specialize in something. Good economics, but their partner choice was probably not so hot. GM has Daewoo and Ford had Mazda, (which they own, rather than being partnered with) but Cherry? Really? Have u seen their crash tests. Go Google it and u can watch the drivers cabin scrunch up like an accordion killing all the dummie models inside. I don’t want any Cherrys here state side, thanks for trying though Chrysler.

    As for the Aveo, it has sold exceptionally well all over the world. It is the best selling car for Chevy in Europe, does exceptionally well in China and other Asian markets, and sells exceptionally well here state side. If I am not correct, I do believe it is the best selling sub-compact here, though it may be in second place. Don’t quite remember the numbers. Either way, this car sells hundreds and hundreds of thousands of cars every year. Couple that with the new redesign, and this thing is a beauty, compared to what it was and some of its competition. Plus, if we are lucky, another redesign will come in 2010 coupled with GM’s 1L 4 cylinder turbo……ooo, sounds wonderful. : )

  • Bubba Nicholson

    Chrysler should build the Dymaxion or something similar.

  • Giant

    Chrylser should have considered Tata motors. They make lots of vehicles of all sizes. They are very prominent in India.

    Here’s an idea: Maybe Chrysler should introduce the ricksha here in the states.

  • huh ?

    Rickshaw in the United States ? Are you out of your mind Giant ?

    This is not India you know.

  • Bryce

    rofl, rickshaw. Nice. Tata is not a half bad investment I would say. They could help them bring that small truck stateside. : )

  • petty

    It seems though that Chrysler acted that way to prevent being drawn into a plan that would have required that it, along with Ford and GM, advance money to help bail out Plastech. As the company’s largest customer accompanied by autopartswarehouse.com, presumably Chrysler would have been expected to make the largest contribution to such a scheme.

  • Kenny

    You are right! All the stuff I get that comes of China is low quality junk- especially anything mechanical.

  • Peter

    Kenny, and you’re still well and alive, right ?

    And how much do you spend every week for replacement when your so called “crap” Chinese products break down ?

    Think before you speak mate :)

  • Old Man Crowder

    Don’t forget that Chrysler used to be called “Daimler-Chrysler”.

    Then the Mercedes folks got tired of the Chrysler sponge and cut their ties.

    I wonder how soon this Chinese company will realize their mistake and head for the hills too?

    As an aside…I understand that Chrysler will be offering the Aspen as a hybrid. Anyone know some stats on that? Is it a full or mild hybrid? Price?

  • Aggieland

    Peter,

    Literally speaking, not absolutely everything that comes out of China is crap, but an alarmingly high amount is crap. Do you remember the tainted pet food that came out of China? Do you remember the toys that had lead paint – China. All the Chinese care about is highest margin of profit. If it means using stuff that might be dangerous – they just don’t care – they will try to get away with it and will only change production parameters if they’re caught. And when you compare their stuff to similar products from Japan, Europe, good ol’ USA, even Mexico, Thailand, etc. the fit and finish just isn’t as “polished”.

    If you look caefully at some products, sometimes the same product might be made in more than one country. My wife and I always look on the box/package/label to see where it was made. If we see one box from Mexico while another box isays “made in China”, yup, we take the one made in Mexico.

    FYI – my wife is from Taiwan (Chinese origin), and she thinks everything from China is crap.

  • uktiger

    Really? Is that what they teach at aTm? No wonder the people in Austin laugh at you.

  • Aggieland

    Oh no, don’t tell me you’re burnt orange, uk.

  • Bryce

    Chrysler Aspen is full 2 mode just like the CHevy Tahoe, but will be priced about 5k-8k less, which falls in line with its usual pricing of being a ways below the tahoe. It should probably produce fuel efficiency numbers in line with the Tahoe hybrid as well along with the same hauling capacity I expect.

  • Anonymous

    I’ve told you guys a million times….the AMERICAN CAR COMPANIES ARE SLEEPING WITH THE OIL COMPANIES. Now they realize its better to be single!

  • uktiger

    No, Mizzou, the best public university in Boone County, Missouri. Don’t be fooled by cheap china talk. If you drive a BMW or Mercedes, even though the parts content says Germany, its mostly from china. Daimler outsources most of its precision machining design to China, they are the only ones to do the work now.

    Our industrial capacity is sucking wind right now. When you take away the means of production, you take away the capacity to innovate.

  • Cameron Baron

    uktiger,

    Chyrsler has plenty of production facility space. 99.9% sure that’s not the problem. I do agree outsourcing jobs to suppliers is a problem but more because it makes it more difficult to adapt quickly to a changing marketplace. Already Ford and Gm are scrambling to switch over production facilities. Now imagine sending fresh blueprints to suppliers in a foreign country and asking them to do the same.

    Innovation requires R&D, which requires money, of which Chrysler has very little. This move appears to be little more than a stop gap measure which in the end will prove pointless. Chrysler is hardly part of the equation anymore when looking into the future. GM and Ford are the only companies with hope.

    I also think speculation that the US Auto industry is in bed with big oil is silly. GM and Ford made alot money on trucks and SUV’s. Oil got more expensive. What do you do? Spend millions retooling production facilities to respond to consumer change? Or wait it out and hope oil prices come down.

    These guys aren’t that stupid and they certainly haven’t been shoving vehicles down the throats of unwilling consumers. That’s just silly

  • Dee Mullen

    Great… now we can start recalling cars for lead.

  • Bryce

    China is not looking to be the “dominant” military power. There military buildup is so that they can do the same stuff we do. (ie power projection) If ever some fellow is dumb enough to piss off the Chinese in Africa or southease Asia, they want to be able to go in there and level the place jsut as we can. America vs. China mono a mono would not be in either of our interests. Besides, when u think of anyone taking on the US, u have t include Europe and probably India cuz they certainly wouldn’t want China to gain anything (old enemies) and Russia may even be forced to join the band wagon cuz China would be eyeing their eastern untapped resources. All that pretty much makes the numbers gap null, which leaves technology, which can pretty much never catch up at the rate the US spends defense R&D money. So no, that Chinese Army isn’t aimed at us, but Africa/middle east/southeast asian/taiwan. probably not so much middle east though cuz they are happy to let us secure that region for us. Ever wonder why China never really participates in UN peace keeping missions….they are happy to let us do it. Soon, they will start to I think to observe western militaries and 3rd world militaries. It should be interesting, but please, don’t kid yourself and be waiting for the “inevitable” Chinese-American war. If u hold your breath, u will most certainly die of exfixiation. : )

  • RKRB

    -Before you bash China any more, consider they are still taking American dollars which are rapidly losing value, still accept our technology and unwanted jobs, and are helping America fill up its unused landfill space with unrepairable throw-away gadgets. American importers surely know and accept the risks of lead paint, uninspected medical supplies, tainted gluten, etc. American consumers have cheerfully preferred lower-cost Chinese goods for many years in their quest for cheapness, and how can they not know that ethical/environmental/safety standards are not going to be up to standards of Europe or America and that this will cost many Americans their jobs? American manufacturers and others throughout the world, including Chrysler and GM, have been more than happy to manufacture in China even though they know customary patent protection and industrial secrecy will not be there. And have you considered the many environmental, health, and social risks from all the factories built so workers in China can build the types of products demanded by wasteful American consumers? When Americans have done all that, it’s improper to continually blame China.
    -Don’t blame China for accepting the role as the dominant economic, military, and political power throughout the world. 35 years after the first energy crisis, Chrysler builds little but supersized guzzlers, and now America is on a diet. If Chrysler is lucky, Chery or Great Wall will buy it. Americans have known full well what they are doing for nearly twenty years, and they can’t have it both ways.

  • dangerous

    This is bad! But they should be sure of the efficiency and effort of that Chinese company they’re working with for they can still survive their own name in the future. Chrysler is already one of the Bloody Car that needs lot of works just to gain what they have before.

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    o yah………………………

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