Chrysler said Monday that it had halted talks with Chery Automobile Co. to have the Chinese company build cars for export.
Global business conditions and changes in the internal management of each company led to the split, Auburn Hills, Mich.-based Chrysler said.
"Many of the original premises the two companies had when entering into the agreement no longer apply," said Michael Manley, Chrysler's international sales and marketing chief.
Chery, China's largest independent automaker, had talked with Chrysler since July 2007 about developing a small car for export to South America and eventually for markets such as North America and Europe.
An accord with Wuhu, China-based Chery would have let Chrysler, the third-biggest U.S. automaker, sell a subcompact model to compete with Honda Motor Co.'s Fit.
Nissan Motor Co., based in Tokyo, agreed in April to build a subcompact car for Chrysler to sell in North America.
Chrysler also has held talks with China's Great Wall Motor Co. about prospects of a partnership.