The two companies signed an agreement in 2007 to set up an auto manufacturing joint venture in Wuhu city in eastern China's Anhui province.

"We are still in talks for the project. But given the current economic situation and conditions in the domestic auto market... there will be some delay," Jin Yibo, a Chery spokesman told AFP.

The venture was to produce and distribute Fiat and Alfa Romeo models as well as Chery's vehicles. Production of 175,000 vehicles a year had been targeted to begin this year.

No new timetable had been set for the joint venture's launch, Jin said.

The company, known for its low-cost cars, on Thursday expanded its product line by unveiling its first mid- to high-end sedan, which will be priced between 200,000-300,000 yuan (29,300-44,000 dollars).

The new upscale car, Riich G6, marks a step towards Chery's goal of becoming a global car company, it said in a statement.

Chery was China's biggest automobile exporter last year, accounting for more than a quarter of the country's car exports. Chery shipped 135,000 units abroad last year, up 12.6 percent from 2007, according to the China Association of Automobile Manufacturers.

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