December 9, 2008 / 12:22 AM / 11 years ago

China's Chery halts Chrysler talks, cool to U.S. assets

SHANGHAI (Reuters) - Chinese car maker Chery Automobile has halted talks with Chrysler LLC to sell cars to South America, a company spokesman said on Tuesday.

Chery has also no plans to buy auto assets in the United States, its chairman was quoted by state media as saying.

In July 2007, Chery and the No. 3 U.S. automaker had agreed to manufacture compact cars under the Chrysler badge for sale in the Americas and the two parties held talks to execute the plan.

“We have now decided to end the talks due to the changes in the internal strategies of each company,” Chery spokesman Jin Yibo told Reuters on Tuesday.

Nissan Motor Co (7201.T) agreed in April to build a subcompact car for Chrysler to sell in North America. Chrysler also has held talks with China¡s Great Wall Motor Co (2333.HK) about a partnership.

Chery also had an initial agreement with Italy’s Fiat FIA.MI to set up a car manufacturing joint venture in China, which was scheduled to start production next year.

Jin said the two-parties were still in discussion.

Ford Motor Co (F.N), which owns Volvo, and General Motors Corp (GM.N), owner of Saab, are trying to sell those units as they seek a multi-billion dollar government bailout, but so far Chinese auto makers have not expressed an interest in buying.

Chery, which secured a 10 billion yuan ($1.45 billion) bank loan from the China Import-Export Bank this week, will use the money to improve its product quality rather than buying auto assets in the United States, Chairman Yin Tongyao told the Shanghai Securities News on the sidelines of a company event.

Dongfeng Motor Group Co, China’s third-largest automaker, is monitoring the situation of Detroit’s troubled automakers, but a source with direct knowledge of the matter told Reuters last week it was too early to say if it would be interested in buying any of their assets.

Chery is expected to ship more than 140,000 vehicles this year, mostly to the emerging markets, Yin was quoted as saying. It sold 119,800 units overseas in 2007.

($1=6.877 Yuan)

Reporting by Fang Yan; Editing by Jacqueline Wong

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