Chrysler Small Car Project Halted

While Chrysler Corp. and its new owner Cerberus Capital Management are still enjoying the Honeymoon phase of their courtship, Chinese automaker Chery is reconsidering its deal with the U.S. automaker to build Chrysler-branded small cars. It seems no one from the soon-to-be defunct DaimlerChrysler alerted Chery to the impending deal, which came as a "total surprise". Chery's general manager Zhang Li told a financial daily that his company has halted the Chrysler small car project until such time as both automakers can renegotiate their agreement.

One wonders if Chery hopes to renegotiate the deal in their favor now that Chrysler Corp. has new owners at the helm, potentially with more money to spend on a Chinese-built small car. Chery may have the upper hand here, as it knows Chrysler desperately needs a B-class small car to sell around the world and, as far as we know, has no plan B in the works if the deal with Chery falls through.

http://www.autoblog.com/2007/05/21/chrysler-small-car-on-hold-chery-wants-to-renegotiate-with-new/