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Friday, October 2, 2009
Chrysler vehicle launches at risk in feud with Daimler AG
Alisa Priddle / The Detroit News
The launch of key Chrysler Group LLC vehicles next year is being threatened once again by a new parts dispute between the automaker and former owner Daimler AG.
At risk are the next-generation Jeep Grand Cherokee and Dodge Durango sport utility vehicles and the Chrysler 300 and Dodge Charger full-size sedans. The products are Chrysler's most important launches in 2010 and the only completely redone passenger vehicles the Auburn Hills-based automaker is introducing in two model years.
To safeguard these crucial launches, Chrysler on Thursday amended a lawsuit filed in August asking a U.S. bankruptcy court to settle any lingering and future parts disputes between the companies once and for all.
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Daimler feels the matter can be resolved outside the courts, said spokesman Han Tjan.
This is the second round of parts disputes the two have turned to the courts to settle. In both cases, the parts are supplied exclusively by Daimler.
In the latest development, the first vehicle in jeopardy is the Grand Cherokee. Chrysler is scheduled to build versions for sale starting in May. To meet that timetable, Chrysler was preparing to build early versions or prototypes in the next month.
But assembly cannot begin without some crucial parts supplied by Daimler in a relationship that dates back to when Daimler owned Chrysler under the umbrella of DaimlerChrysler AG.
Chrysler wants Daimler to finalize the axle contract to ensure shipment of the parts that are needed in the next 20 days to stay on schedule for the launch, said Chrysler spokesman Michael Palese. At least six months are required for testing new vehicles before they can be built for sale. No other suppliers can provide the necessary axles until January 2011, Chrysler says.
Other contracts not yet finalized involve transmissions and some steering columns, according to court documents.
The parts are pawns in a larger dispute that centers on diesel engines Daimler supplies Chrysler. That contract has not been finalized either.
Chrysler did not buy as many diesels for use in vehicles to be sold in Europe as originally envisioned and Daimler wants $80 million in compensation for the volume shortfall.
Chrysler's position is that any previous contract disputes were resolved during bankruptcy and no money is owed by the new company formed with Fiat SpA.
Daimler contends Chrysler used bankruptcy to try to change existing agreements and enter new ones.
In August, Chrysler, worried Daimler would stop shipping torque converters and steering columns for different vehicles, filed its initial lawsuit. Those contracts have since been resolved.
Chrysler wants the court to stipulate that all past agreements remain in effect and no more money is owed. The automaker also wants an injunction if Daimler fails to ship parts in the future.
"Chrysler has too much at stake to take a chance," Palese said. "These are important vehicle programs at a critical point in their launch cycle. We can't afford any delays.
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