Gasgoo.com (Shanghai September 28) - Due to difficulties adhering to government standards, the proposed joint venture between Chery and Subaru may not be coming to fruition.

Being incredibly anxious to expand its product line, Chery has been looking up and down for a joint venture partner, making contacts with Fiat, Chrysler and Quantum, a subsidiary of Israeli's largest holding company Israel Corporation. All three of these proposed partnerships would gain government approval, but due to lack of finalized production sites the first two fell through, with only the Chery-Quantum alliance going past the planning phase.

The proposed Chery-Quantum venture would see Chery invest land and technology, while Quantum would provide economic funding, in a 55-45 partnership. According to independent industry analyst Jia Xinguang, cooperation was limited to economic investment, with each company working more or less independently of the other.

The partnership with Subaru would be quite different, as it would see Chery expanding past its traditional segment of affordable cars. The partnership was born in the fire of intense media speculation. Finally, in June, Chery signed an agreement with Subaru's parent company Fuji Heavy Industries (FHI), with 30 billion yen ($4.7b) planned to be invested. The joint venture would have an early production capability of 50,000 vehicles per year, increasing to 150,000 after completion.

However, three months later the partnership hit a serious hurdle with the National Development and Reform Commission rejecting the proposal on the grounds that it violated the national Policy on Development of Automotive Industry. Chery and FHI have yet to comment on the rejection, however, inside sources were reported as saying that the two companies are continuing to communicate with the government.

Source:.gasgoo