Chrysler said it will choose several small-car models now being developed by Chery and help make branding, design and regulatory changes to prepare them for export. In the future, both companies will jointly develop new products based on Chery small-car platforms.

The first car to be produced under the deal will be Chrysler''s Dodge brand and will be available within 12 months, though initially only in markets such as South America and Eastern Europe, Chrysler executives said at a press briefing.

"This is the start of a very long relationship between Chrysler and Chery," Chrysler chief executive Tom LaSorda said at a press briefing in Beijing. "As part of the Chrysler Group''s global transformation, we''re finding new ways to bring vehicles to market faster, more efficiently, with less costs, and with the same high-quality standards," he said.

LaSorda told reporters on the sidelines of the briefing that he expects cars made under the deal to be sold in the US by "mid-to-late 2009."

Total production under the deal will reach 50,000 to 100,000 or more cars a year, and could be in the hundreds of thousands, LaSorda said.

Chrysler sold 2.14 million vehicles in 2006, down about 7 per cent from a year earlier.

Chery, which specializes in small cars, sold about 300,000 cars last year and says it expects to sell 393,000 cars in 2007. The company exports cars to many developing countries but is yet to enter the US market.

Chrysler and Chery signed a letter of intent in December, but there had been uncertainty over the deal since DaimlerChrysler''s decision in May to sell 80.1 per cent of Chrysler to private-equity concern Cerberus Capital Management L.P.

For Chery the deal is an opportunity to enter the U.S. and European markets, a longtime ambition for the fast-growing company, using well-established American brand names such as Dodge and Jeep.

The agreement between Chrysler and Chery has been opposed by labor leaders who argued that the deal will turn Chrysler into a "door opener" for China''s auto industry as it seeks inroads in the US and Europe.

China is also the world''s second-largest and fastest-growing vehicle market. US auto makers have long been eying the Chinese market amid lacklustre sales at home. Most major auto makers have set up factories in China, but until now most production has been aimed at satisfying booming Chinese demand.