BEIJING -- Developing models for export to Europe is progressing nicely, although development for US-bound models has stalled, managers at Chinese automaker Chery Automobile say.
The first model likely to be exported to Europe is a crossover vehicle designed in Japan, Chery managers say. Scheduled to be unveiled in a few months, the unnamed front-wheel-drive car has a 1.9-liter common-rail diesel engine.
Chery, a small independent automaker based in the central China province of Anhui, is developing six models for export.
European companies are playing a key role in most of Chery's other models for export.
Bertone of Italy is designing at least one sedan and an SUV for Chery. Fellow Italian design house Pininfarina also is styling a vehicle for Chery, while AVL List of Austria has designed a series of engines.
Chery is thought to have signed an agreement with a European distributor or distributors, though sources at the Chinese carmaker wouldn't disclose names.
Developing models for Europe, where tastes are closer to those in China, is easier than for the US, a Chery manager says.
"The US market is unique," he says. "US people don't care about fuel economy, they only want horsepower."
The manager is encouraged by a recent shift to smaller models in the US because of skyrocketing fuel prices. He adds: "We will be happy if the US comes closer to other markets" in terms of tastes.
Chery's development of vehicles for export to the US has halted because of a lack of funding from Visionary Vehicles LLC, Chery's US distributor.
"We need to have some kind of contract and some kind of initial funding," a Chery manager working on the export models says.
The agreement with Visionary Vehicles to distribute five Chery models in the US in 2007 is only a verbal agreement, he says.
Chery engineers are also awaiting some final information from Visionary Vehicles, such as what engine size to put in the US-bound models and what quality the interiors should be, another Chery manager says.
Visionary Vehicle's failure to sign dealers is the reason behind both problems, the Chery managers believe.
Automotive entrepreneur Malcolm Bricklin announced in February that he would begin importing five China-made cars to the US in 2007.
Those cars would be sold through 250 dealerships, each costing $15 million (currently E12 million) to build.
But signing dealers has been tough without sample models to show potential investors.
So far, the only confirmed US dealer is Tim Ciasulli of Union, New Jersey. He paid $2 million for the right to build a Chery dealership. Visionary Vehicles says other dealers have been signed, but won't disclose details.
Developing cars for the US also has proved tougher than engineers anticipated, say the Chery managers and Chery suppliers.
"Originally, we did underestimate the amount of time it takes to get all the permits" for selling models in the US, a manager involved in model development says.
Chery engineers also underestimated the safety standards and quality level the US market demands, a Chery supplier says.
"Chery rushed quickly from the design studio to the production stage, but left out real engineering in the middle. The suppliers have to go back and do it the right way to be in line with US standards for safety and performance," the supplier says.
Interiors were also a problem, he adds. For example, Chery picked colors, materials and interior wood trim that did not match US and European driver preferences, he says. In addition, instrument clusters and audio systems were not in line with Western tastes.
Says the supplier: "Engineering needs to work side by side [with the designers] to make the designs feasible and in line with the regulatory environment."