China's Chery Automotive is to supply
Chrysler-branded vehicles for sale in the US and Europe. But it is
unlikely to make the logical next step by acquiring the troubled US
automotive giant.
Its a logical step in industrial terms, at least. Sooner or later, China's carmakers are going to start manufacturing in the west. One of them, Nanjing Automotive, already has by buying up MG Rover's car plant in the UK -- see this EngagingChina story for background.
But the sheer size of Chrysler and the political fireworks that would ensue make it unlikely that Chery -- or any other Chinese manufacturer -- will bid for Chrysler, which was formally put up for sale earlier this month.
"Chrysler is no Rover," one analyst told Reuters. "How could we expect Chery or First Automotive Works (FAW) to turn it around, while Daimler failed to make it? "
The board of DaimlerChrysler yesterday approved an alliance between its Chrysler Group unit and China's Chery aimed at the growing market for smaller cars.
The deal was originally announced in December and now has to be approved by Chinese authorities. Daimler-Chrysler has not yet specified which of the Chrysler group brands - Chrysler, Jeep or Dodge - the Chinese vehicles would use.
The development by itself is not that radical. It an increasingly common tactic for car makers in the west to import Asian-built cars, particularly for market segments in which the western firm is not present or in cost-sensitive segments like small cars. General Motors imports its Aveo car from South Korea, for example.
Nevertheless, the deal between Chery and Daimler-Chrysler will help boost the credibility of Chery in the west and it leaves the door open for the Chinese firm to buy a Chrysler production plant and so get closer to its new markets in the west.
Coincidentally, the day Chrysler announced its approval of the Chery deal, Toyota announced it would build a SUV plant in Mississippi, its eighth US plant.
How long before Chinese manufacturers follow the Japanese and also start manufacturing their vehicles in the USA?
More on the possible buyers for Chrysler in this Indepedent story.
as for overseas expansion, I think Chinese auto makers are going to look first at emerging markets rather than buying inefficient plants and pricey workers in the low-growth west.