The deal between Chrysler and Chery to build small cars for the North American market has been anything but smooth sailing, with numerous delays and obstacles causing both companies to have almost walked away from the deal previously. Now, Chrysler has formerly announced that both it and Chery have “mutually agreed” to end talks on a strategic cooperation that had been ongoing since July 2007.

“The economic situation and market environments around the world have changed significantly since the agreement was signed,” Mike Manley, Chrysler executive vice president of international sales and marketing, said in a statement. “Moreover, both companies have since gone through major internal changes and evolution, resulting in different business directions and priorities versus a year ago. As a result, many of the original premises the two companies had when entering into the agreement no longer apply.”

News of the substandard quality of Chery's cars for the U.S market has been known for some time, with Phil Murtaugh, Chrysler's Asia chief, revealing to Automotive News earlier this year that "neither Chrysler nor Chery is comfortable that those products as they exist today meet the requirements of Chrysler."

One of the major hurdles of the project was getting the Chinese designed and built vehicles to meet tough emissions and safety standards in North America.

Despite the hiccups Chrysler is having with Chery, the company recently unveiled the new Dodge Trazo compact car that it has sourced from Nissan. The Trazo will go on sale in South America later this year and there has been unconfirmed speculation that it may reach U.S. shores as well.