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Chery in new-brand talks
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10:04, July 26, 2007

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China's Chery Automobile and its US partner Chrysler are discussing the possibility of creating a new brand to make forays into emerging markets where neither has a presence now, according to a source.

The source, who asked not to be named, told China Daily that the two firms intend to jointly develop small models that would not bear a Chery or a Chrysler badge for markets such as India.

"The two parties also intend to form a joint venture responsible for marketing these new-brand cars," the source said. But the source wouldn't reveal the name of the new brand or other details.

The Chery spokesman was not available for comments yesterday. A Chrysler China official refused to comment.

Talks on the new marque come hard on the heels of Chery sealing a deal with Chrysler on July 4 to make small cars in China bearing badges of the Detroit-based group for the North American and European markets.

The first model for the deal, a Dodge based on Chery's 1.3-liter A1 notchback, will be shipped to Mexico before January. Other models, the details of which have not been disclosed, will be exported to the US in 2009.

However, May Arthapan, deputy forecasting director for consultancy Automotive Resources Asia Ltd (ARA), said: "I'm skeptical about exports (of Chery-made Chrysler cars) to the US in the near and medium terms. The US is just not the market for low-cost, entry-level cars."

India "makes sense as one of the destinations", as the world's second-most populous country after China has a huge market for small cars, Arthapan said.

"The new brand seems to be just in the discussion stage for now," she added.

Another source said Chery is also looking to branch out in India with its own-brand models. This source said the Chinese firm is in talks with India's International Cars & Motors Ltd to assemble its QQ micro cars in the country, where 70 percent of light vehicle sales are mini and subcompact cars.

ARA predicts that light vehicle output in India will grow to 2.7 million units a year in 2010 from 1.6 million last year to meet mounting demand.

The Indian vehicle market is mainly controlled by local carmakers like Hindustan Motors, Tata and Japanese brands.

Chery, China's leading car exporter, is pushing overseas sales aggressively. So are other domestic carmakers such as Geely and Brilliance.

The firm, based in the eastern city of Wuhu, almost tripled its sales abroad to 52,712 cars in the first half of this year from a year ago. It said earlier this month that it expected to sell more than 100,000 cars for the full year, up from 50,000 units in 2006.

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