Wed, Dec 10, 2008 page10

• Chrysler, China’s Chery call off talks on cooperation

  CANCELED The US automaker said the companies had experienced ‘major internal changes and evolution’ that led them to end plans to make a low-cost vehicle in China

  • AP
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  Chrysler and China’s biggest domestic automaker said yesterday they have called off talks on cooperation because of the global financial crisis.

  The proposed partnership with Chery Automobile Co (奇瑞汽車), first announced in July last year, was meant to produce a low-cost model in China to be sold under Chrysler’s Dodge brand in the US and Europe.

  “There’s a global financial crisis happening, and the two sides decided it would be better for both companies to develop independently and promote their own businesses,” Chery spokesman Jin Yibo (金弋波) said.

  He said the talks were called off on Monday.

  The companies declined to disclose details of the talks.

  Auburn Hills, Michigan-based Chrysler LLC, which is seeking US government aid to avoid a financial collapse, had hoped the Chery partnership would add to its small car lineup following its split with Germany’s Daimler AG last May.

  The companies have gone through “major internal changes and evolution, resulting in different business directions and priorities,” Mike Manley, Chrysler’s executive vice president for international sales, said in a statement.

  “As a result, many of the original premises the two companies had when entering into the agreement no longer apply,” Manley said.

  Chrysler and General Motors Corp are seeking a total of US$14 billion to US$15 billion to survive through early next year.

  Ford Motor Co has said it has enough money to stay afloat unless one of the other Big Three US automakers goes under or the economy deteriorates more sharply.

  In the US, a federal “car czar” would oversee a government-run restructuring of US auto companies in return for a US$15 billion bailout of the beleaguered industry under an emerging deal between the White House and Congress.

  Negotiators worked through the night on Monday narrowing differences on a bill to rush short-term loans to the struggling Detroit carmakers through a plan that requires that the industry reinvent itself to survive — and pay back the government if it fails to do so.

  The package could come to a vote as early as today.

  The measure would put a government overseer named by US President George W. Bush in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the automakers fail to do what’s necessary to become viable.

  The White House was seeking tougher consequences, including allowing the overseer to force the companies into bankruptcy if they were not doing enough to cut labor costs, restructure their debt and downsize to stay afloat.

  The developing plan would dole out auto industry loans right away, drawing the money from an existing program meant to help the carmakers retool their factories to produce more fuel-efficient vehicles.

  Then the czar would write guidelines, due on the first of the year, for restructuring the companies.

  The proposal would attach an array of conditions to the auto bailout money, including some of the same restrictions that were imposed on banks as part of the Wall Street rescue.

  Among them are limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
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