US automaker Chrysler and Chinese car company Chery have signed a deal to launch a low-cost production facility in China that would export cars to the United States and other global markets.
The Chrysler-Chery deal means that the already ubiquitous phrase "made in China," which describes a wide range of products exported around the world, will soon apply to passenger cars sold in the U.S.
For years, major foreign automakers have been aggressively expanding production in China, which last year became the world's second-largest market for cars. The China Association of Automobile Manufacturers says passenger car sales in China last year rose 37% to nearly four-million.
Chrysler Group head Tom LaSorda told reporters in Beijing that his company is committed to the China deal.
"The Chrysler Group has a long-term commitment to China. We are committed to continue offering world-class vehicles to the domestic market. And as of today, we are committed to building vehicles here for export."
LaSorda said the first Chinese-made cars from the venture are expected to reach Latin America or Eastern Europe within a year. He said he expects models for export to North America or Western Europe to be ready within two and a half years.
LaSorda said Chrysler will work closely with Chery to ensure that the cars meet U.S. and European safety and emissions standards. He added that the venture's production could reach several hundred thousand autos per year.
Japan's Honda Motor company has exported Chinese-built Jazz model cars to Europe since 2005.
Ten-year old Chery, based in the eastern Chinese city of Wuhu, is China's largest automaker. The company assembles vehicles with partners in Brazil, Egypt, Iran, Malaysia, Russia and Ukraine. It recently announced plans to open a factory
with an Argentine partner in Uruguay, its first venture in Latin America.
Chery CEO and chairman Yin Tongyao said the deal will help his company improve its skills as it tries to expand foreign sales of its own models.
He said Chery has little experience in international business and has much to learn from a big and experienced company like Chrysler.
Chinese carmakers already export low-priced trucks and buses, mostly to Africa and other developing countries.
The first Chrysler-Chery export will be based on Chery's A-1 compact car model, and sold under the Dodge brand. LaSorda said the two companies will jointly develop future models.
The Chrysler Group is a division of DaimlerChrysler. The division is being sold to Cerberus Capital Management, an international investment firm, and will continue to sell Chrysler and Dodge brand automobiles.