Cuda340

Chrysler sues Daimler over Parts Supplies

It says Daimler is withholding supplies for vehicles in 2010 lineup
Alisa Priddle / The Detroit News
Chrysler Group LLC is suing Daimler AG for refusing to honor contractual commitments to supply parts needed to continue production of some of its 2010 model vehicles.

Chrysler also is seeking an injunction to prevent Daimler from stopping the supply of diesel engines as well as torque converters and steering columns -- described as key components that cannot be obtained from any other supplier.

Among the vehicles facing shutdowns in production are the Dodge Challenger and Charger, Chrysler 300 and Jeep Grand Cherokee.

The supply relationship dates back to when Daimler owned Chrysler under the umbrella of DaimlerChrysler AG.

Daimler sold Chrysler to Cerberus Capital Management LP in 2007 but supply contracts were put in place to safeguard arrangements deemed worth preserving.

Chrysler Group filed the lawsuit against Daimler in U.S. bankruptcy court in New York on Friday in conjunction with Old Carco LLC, which is the part of the carmaker still in bankruptcy. A new Chrysler was created June 10 in an alliance with Fiat SpA.

In the lawsuit, the Auburn Hills company is seeking damages for any extra costs that accrue because of what it contends is a breach of contract by Daimler.

Daimler has no comment until it better explores the lawsuit, spokesman Han Tjan said Tuesday night.

Daimler has said Chrysler owes about $79 million to make up for not buying as many 2.2-liter diesel engines as the U.S. company originally planned to use in its vehicles sold in Europe.

Chrysler has seen its sales plummet in Europe as well as North America this year.

The automaker is asking the court to rule on whether it must make up the volume shortfall.

Chrysler Group sees Daimler's refusal to ship parts as extortion, claiming it is no longer obliged to pay for the shortfall under previous settlements made with the old Chrysler. The automaker's position is that all past contracts and agreements were transferred to the new company formed with Fiat.

The German automaker "is in direct violation with an April 17, 2009, settlement agreement approved by the bankruptcy court and also is in direct violation of a dispute resolution agreement executed by Chrysler Group and Daimler on July 6, 2009," Chrysler spokesman Mike Palese said.

Detroit, Ontario affected.
The vehicles facing a parts shortage are made in the Jefferson North Jeep plant and the Brampton, Ontario, sedan plant, said Chrysler spokesman Gualberto Ranieri.

Chrysler underwent an expedited trip through bankruptcy, citing the pressing need to resume vehicle production for the 2010 model year. The automaker closed all plants during the 42 days it was under Chapter 11 protection, and shortly after workers were called back to work, they were off again for the summer shutdown to prepare plants to build the 2010 models that will hit showrooms this fall.

Additionally, any vehicles Chrysler sells in Europe need diesels to succeed in that market.

Thor77

I'd hate to see the challenger go out due to a fight over parts supply. I can sort of see Daimler's point though. Chrysler owes them 79 mil supposedly, and wants to throw that out the window with the bankruptcy, but now wants Daimler to send them a bunch more parts, presumably on credit. But the 79 mil was not for parts they bought and didn't pay for, but rather for parts they didn't order but were supposed to. I hope they can work something out.

canadiancanuck

is this why my next POS is on delay??? I was told, this week it would be here, then middle of Sept, now late Sept early Oct.???? is this effecting ALL plants?? I swear the car gods really hate me??? ok ok so I let my dog pee on the side of a smart car once and every car I touch tries to kill itself or attempts to take me with it!!!