Deconstructing Chrysler

DaimlerChrysler officials have confirmed that they have been in serious, ongoing negotiations with the government-owned Chery Automotive Co. of Wuhu, China, to handle future development and manufacture of small cars for Chrysler.

Nothing has been decided yet. And there are many obstacles to any proposed Chrysler-Chery venture, including possible opposition from the United Auto Workers union in the United States.

But there are also many things that make a Chrysler-Chery venture enticing to executives on both sides of the talks.

Chery isn't hiding its intentions of entering the U.S. market, possibly by 2008. Linking with Chrysler would give it a ready-made distribution network.

Chery has demonstrated its ability to build high-quality small cars inexpensively and profitably, something the Chrysler Group sorely needs.

And forming a Chrysler-Chery partnership would give DaimlerChrysler -- or Daimler-Benz, if the company chooses to return to that name -- the grand entrance into the booming Chinese car business that it wants. That access would be especially helpful to the German company now that Chery has joined the world's largest online business-to-business components sourcing portal.

The sourcing consortium includes GlobalAutoIndustry.com, Shanghai KOWIN Automotive Components Co. and the global sourcing division of Chery. Consortium members claim that they are able to quickly link automobile manufacturers with the highest-quality, lowest-cost Chinese parts suppliers -- a boon to any company trying to make it in the highly competitive, capital-intensive car business nowadays.

It makes one wonder: Chery is one of the fastest-growing car companies in the world. It's been around only nine years but is rolling in cash -- probably enough to buy the Chrysler Group and the Chrysler Building here, if it chooses to do so.

Imagine that: the tallest China-owned building in the United States. It's not impossible.