Chrysler cut a deal with Chinese car maker Chery to build small, gas efficient vehicles. Chrysler will market the cars worldwide. The deal is likely to torque off the UAW no end, and could make Chysler’s labor negotiations for the US market more difficult.
The Chrysler deal is strange. Chery had earlier plans to sell cars in the US that were recently cancelled on concerns that its product was not up to the standards that most US consumers have for new cars.
Chrysler needs a deal to save its bacon in North America. The Daimler unit has been losing money and is trying to cut its cost per vehicle by $1,000.
But, trying to sell cars that may be viewed as inferior and making a decision that the UAW will view as a threat raises more problems that it solves.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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