DaimlerChrysler AG is currently working on a deal to sell Chinese built cars in the US under its Dodge label. The partnership, which is being formed with China’s Chery Automobile Company, will further instil fears that domestic vehicle production will move to low-cost countries and cause job losses at home. Most of the established auto makers already have deals with China, but this marks the first time that a Chinese company would be building cars for export for a US company.

The Japanese automakers have already been selling Chinese built cars under their own label for years. Main examples include Toyota’s Yaris and the Honda Fit, and this is a segment that Chrysler just doesn’t compete in. Chrysler is likely to bring over a car similar to its Dodge Hornet to compete in the subcompact market. This comes after news that Chrysler is expected to lose $1.5 billion for its third quarter, more than double its previous loss.

Sales of Chrysler vehicles have slowed so much that some dealers have had to halt purchases of 2007 vehicles because they have too much 2006 stock still on their lots. The glut is due to the fall in demand for trucks and low fuel efficient cars. Further, high floorplan interest rates have also driven up the cost of selling cars.

[Source: The Detroit News]