Chrysler's China Deal Dies

Posted by: Bruce Einhorn on December 9, 2008

Smart timing from Chrysler. Just as lawmakers in Washington are debating whether to throw a lifeline to Detroit’s Big Three, the company has announced it is backing away from a plan to sell Chinese-made cars in the Americas. Chrysler had agreed last year to cooperate with Chery, one of the top automakers in China, but now the companies have decided to go their separate ways.

The announcement shows Chrysler’s PR guys are finally starting to get their act together. Like GM and Ford, the company suffered a huge image blow when its CEO foolishly flew on a private jet to Washington last month to beg for a bailout from Congress. By announcing the scrapping of its Chery deal now, while negotiations are still underway between Congressional Democrats and the Bush White House, Chrysler wins a PR twofer. The company dispels some suspicion about outsourcing jobs away from the U.S., which might win it some more support on the Hill. At the same time, Chrysler is reminding people about Chinese companies like Chery that have ambitions to become global players. With or without partners in Detroit, the Chinese automakers are not going away. Only yesterday, the Chinese news agency Xinhua reported the Chinese government was giving Chery $1.5 billion to support the company’s global expansion. If Congress and the White House let the Big Three go under, Chinese companies like Chery might be the ones that pick up the pieces.

Reader Comments

Andy

December 10, 2008 8:39 PM

If even in the good times the Big Three can't make a profit to survive, what make people in DC think the bail out will work? The fact is that the US workers are overpaid and inefficient.

rob

December 11, 2008 10:50 AM

Not to mention that the whole plan was stupid and unrealistic in the first place, since China does not have the quality control to sell cars in advanced markets. These people cant even make toys without poisoining children, can you imagine cars???
On the other hand, an agreement with India would make sense. NOTE Mahindra will start selling cars and pickups in America in 2009, and will no doubt be resounding success.

Eric

December 11, 2008 4:02 PM

Andy, you are right, it's not going to work, these bigs three got stuck with cancer. Democrats will not say any word like 'overpay', it's the special interests in play. Government will bait you out as soon as you are a big deal, remember, it has to be really big, do we still has the right to tell other countries to follow free market economy ? It's a big joke

nayak

December 12, 2008 2:05 AM

Rob or rob
Back for more? Tata auto industry is asking or begging UK to bail them out after buying Jaguar and Land Rover!
I don't think that India auto industries is in not position to talk about quality or anything like that! Get back to your desk to answer more phone!

rob

December 12, 2008 10:58 AM

All auto manufacturers are getting bail-outs, so why shouldnt Tata/JLR share the bonanza?
India's auto industry is in a perfect position to talk about quality, since half of HYUNDAI INDIA's production gets exported to Europe (over 250,000 cars this year).
How many cars does China export to Europe? hahha
Chinese better stick to exporting to Pakistan, Iran, Venezuela etc!

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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