Chrysler explorations of potential joint ventures before reaching last week’s alliance deal with Fiat got as far as an initial agreement to rebadge a Kia vehicle as a Dodge for US sale, a Chrysler official has said.
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Chrysler’s chief procurement officer Scott Garberding told a court hearing that Chrysler and Kia got as far as negotiating a term sheet to purchase and modify a Kia vehicle but the Korean automaker backed out of the deal “late in the game” because of manufacturing issues.
According to a Dow Jones report, as petrol prices surged in the US early last year, followed by a recession, Chrysler’s former vice chairman, Tom LaSorda – who resigned last week – spent almost all of his time visiting most of the global automakers trying to forge relationships as slumping sales in the US continued to erode the auto maker’s financial stability.
Deals explored included a joint deal with GAZ and Magna International to build a vehicle in Russia, using spare capacity at a Gaz assembly plant, and larger potential alliances with Nissan, General Motors and Fiat in the past year, Garberding said.
The Nissan deal was explored in a 90-day study under a project named ‘Go Global’, Garberding said, according to the report. The companies had a face-to-face meeting on the study in Toyko in February 2008.
The project [widely reported at the time -ed] looked at the possibility of Chrysler manufacturing a truck for Nissan North America [replacing the Titan line Nissan currently sells in the US] and Nissan manufacturing small subcompact cars for Chrysler, Garberding said. The study also looked at potential cost savings, including purchasing, procurement and manufacturing.
The study wrapped up in May 2008, but the value of the deal had changed “for the most part in the wrong way” as financial conditions weakened, Garberding said.
The companies also explored additional cost synergies, such as savings through product and powertrain initiatives but the discussions didn’t result in a deal, Garbering said.
In August, Chrysler initiated discussions with GM, calling the talks ‘Project America’, Garberding said, according to Dow Jones. There was a series of negotiations and a deeper information exchange in October, he said. However, due diligence stopped after the financial crisis “hit in full force” around that time, he added.
Talks with Fiat originally began in June 2008 with discussions to build the Fiat 500 in a Chrysler plant in Mexico, Garberding said. The companies began talks of a broader alliance in November, he added, according to the report.
