Chrysler (DCX) Goes To China, Tough Day For UAW

The deal for Chinese car company Chery to build small cars for DaimlerChrysler’s (DCX) Chrysler unit is finally sealed. The UAW, which will start contract negotiations with the US car companies in September, is not likely to be amused. But, for Cerberus, the hedge fund buying just over 80% of the car company, the deal could give the Chrysler another avenue for cutting costs.

The announcement may be an early warning for US and European car companies who fear that if Chery gets too much experience making products for markets outside China while working with Chrysler, it will help them export attractive vehicles of their own.

But, those concerns don’t acknowledge the export plans of Chinese car companies that are almost certainly already in place. After watching Japan, and then Korea, move into the vehicle export business, there is no reason that China cannot be next. It does not need help from Chrysler.

Douglas A. McIntyre can be reached at [email protected].

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