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September 11, 2009

US: Chrysler ends engine alliance

Chrysler has said it has ended its engine manufacturing alliance with Hyundai Motor and and Mitsubishi Motors Corporation.

Chrysler has said it has ended its engine manufacturing alliance with Hyundai Motor and and Mitsubishi Motors Corporation.

It’s the latest partnership severed under the new management regime led by Fiat.

The Global Engine Manufacturing Alliance (GEMA) between Mitsubishi, Hyundai and Chrysler was disbanded last month, with Mitsubishi and Hyundai selling their stakes to Chrysler for an undisclosed amount.

The Dundee, Michigan, plant will now build engines for Chrysler vehicles only, including the Dodge Caliber, Chrysler Sebring, Jeep Compass and the Jeep Patriot, the company said in a statement.

Buying out the two partners also clears the way for Chrysler to produce Fiat-designed engines. Fiat owns 20 percent of Chrysler and can get an additional 5 percent by making fuel-efficient engines in the U.S., under terms of Chrysler’s reorganisation.

“Chrysler probably intends to built Fiat four-cylinder engines there,” said Ed Kim, an AutoPacific analyst in Tustin, California, quoted by Bloomberg.

“GEMA is a decent engine, but with Fiat in the picture it makes less sense to continue to the GEMA relationship, especially since Chrysler and Fiat have been pretty public with their intention to incorporate small- displacement Fiat engines,” the analyst told Bloomberg.

Chrysler said the move will have no effect on workers making the co-developed engines at a plant. The company has a total of 191 workers at the plant.

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