Chery Not Ripe for Picking

Find a Chery
Spit it out
The thing's so sour
It makes you pout.

Here ends my contribution to National Poetry Month. And before you scoff, remember -- last year I won a prize from Poets.org (for this little gem.)

Now, Chrysler announced yesterday that while it may not exactly be "spitting out" its joint venture agreement with Chinese up-and-comer Chery Automobile Co., the time to move forward is not yet ripe. This, despite the fact that it's now been more than a year since Chery and Chrysler first announced that the former will make a new small car for the latter to resell.

Um, why doesn't Chrysler just make its own cars?
Point taken. But Chrysler has a bit of a problem when it comes to cars. You see, when Chrysler and Daimler (NYSE: DAI) got divorced last year, Chrysler may have gotten the house, but Daimler kept the small cars (at least, the Smart-est ones).

Check out Chrysler's website, and you won't find a good, cheap, small car anywhere on the lot. Dodge has the Caliber, but that's about it. Meanwhile, gas prices continue to skyrocket, and while that's good news for oil producers like ExxonMobil (NYSE: XOM) and BP (NYSE: BP), it's putting the hurt on oil users like you and me. Result: Car buyers increasingly want cheap, small, fuel-efficient cars, and Chrysler needs to meet that need.

And as for buying from China, Chrysler has good reason to reach across the ocean to pick Chery for this task. Ford (NYSE: F), GM (NYSE: GM), and even Toyota (NYSE: TM) aren't building in China out of the goodness of their hearts, you know.

If Chrysler can buy cars in China and re-badge them as Dodges more cheaply than building them itself, then that's the economically sensible thing to do. Of course, this whole plan falls apart if Chery can't deliver the goods. Sadly, that appears to be the case right now, with Chrysler lamenting that "safety is a huge challenge" and "neither Chrysler nor Chery is comfortable that those products as they exist today meet the requirements of Chrysler." Which is why it's such good news that Chrysler already has a backup plan in its cross-manufacturing deal with better-vetted (and Motley Fool Global Gains-recommended) Nissan (Nasdaq: NSANY).

Because sadly, Chery's cars are the pits.

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