Chrysler may ship transmission line to China

The Dodge Hornet concept, displayed at the Beijing auto show in November, suggests the direction that Chrysler may pursue for a small car assembled in China.

Alysha Webb | | Automotive News / January 22, 2007 - 1:00 am

SHANGHAI -- As part of its plan to source small cars in China, the Chrysler group is negotiating to sell to Chery Automobile Co. a line that produces transmissions in Kokomo, Ind., industry sources say.

Chery wants to ship the line to China.

Chery would install the front-drive transmissions in small cars it has agreed to produce for Chrysler. The cars would be shipped to markets around the world, including the United States.

The small-car deal, including the transmission line, will help Chrysler fill a hole in its lineup. For Chery, the line would provide inexpensive, durable transmissions and an opportunity to develop its engineering and production expertise.

The plan to buy the four-speed transmission line was confirmed by several Chery sources and two supplier sources.

"For the U.S. market, an automatic transmission is a must," says an engineer at Chery's headquarters in the central China province of Anhui.

Chrysler spokeswoman Michele Tinson declined comment.

"This would be an excellent opportunity for Chery to acquire a robust, proven transmission design," says Eric Fedewa, vice president for global powertrain forecasts at CWM Worldwide, a consulting firm that tracks automotive production.

Eventually, Chery wants to export its own cars to the United States. Chery has not said when, but a good guess would be three years.

The transmission line would be another step in Chery's long-term effort to gain engineering and production expertise.

The Chrysler deal to build small cars also will provide Chery with steady income to buy technology and expand.

In 2006, Chery sold 302,478 vehicles, a bit more than the output of one standard assembly plant in the United States. China's government still must approve Chery's deal to produce cars for Chrysler.

Chery would initially assemble the Chrysler cars with many imported parts, gradually localizing parts as more suppliers in China meet international quality standards.

Neither Chrysler nor Chery has said when exports to the United States will begin.

Front-drive transmissions, which combine the axle and transmission, are called transaxles. Four-speed transmissions are losing ground in the United States to five- and six-speed designs.

One source said that Chrysler is looking at replacing the four-speed transaxle line with a line to produce dual-clutch transaxles. Dual-clutch trans-axles adapt a manual transmission so it shifts automatically.