Chery Nice For Chrysler

Shu-Ching Jean Chen, 03.15.07, 3:00 AM ETHONG KONG -

A shining blue subcompact hatchback displayed on the Web site of the Chinese state-owned automaker Chery Automobile is soon to be touted by DaimlerChrysler to cost-conscious buyers in the U.S. and Europe.

Three years in the making, the car, called the A1, is slated to debut at the Shanghai Auto Show in April, and as part of its recently established partnership with DaimlerChrysler (nyse: DCX - news - people ), Chery says it will be sold under the Chrysler brand in Europe and North America, aimed at trendy young white-collar professionals and female consumers.

The A1 model features a stylish dashboard with three cone-shaped meter displays, a body designed by Italy’s Bertone Group, famed for its work for Porsche, and a British-designed grey leather interior with cream-colored seats.

According to China Auto News, the car, produced at an estimated cost of 50,000 yuan ($6,460), is likely to be sold under Chrysler’s Dodge brand. Another Chinese newspaper said the sticker price would be between 50,000 yuan and 80,000 yuan ($10,335), citing a Chery retailer in Guangzhou.

There is a growing market around the world for small, cheap, fuel-efficient cars, and DaimlerChrysler is looking to China and Chery to help it enter that market inexpensively.

DaimlerChrysler’s board approved a preliminary deal with Chery on small vehicles last month with an eye to finalize an agreement by the end of March. Under the terms, Chery-built vehicles will be distributed under Chrysler brands mainly in North America and Western Europe, in ways similar to existing ventures between Western automakers and Asian manufacturers in the price-sensitive, high fuel economy segment.

It’s not just DaimlerChrysler that has high hopes for A1. Chery is calling it a watershed product for the company that it hopes will solidify its presence on the world stage as an auto exporter to be reckoned with. Its direct competitors in the international markets will be Nissan Motor (nasdaq: NSANY - news - people )'s March and Toyota Motor (nyse: TM - news - people )'s Yaris.

It is unclear what would happen to the partnership if the Chrysler division is sold. (See: “ An Independent Chrysler?”)