Chrysler has cancelled a twin clutch gearbox manufacturing deal with Getrag Transmission in a dispute over financial issues which has led the automaker to file a lawsuit against its supplier.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Getrag said at the weekend it had met with Chrysler on Friday in an effort “to resolve the issues surrounding its agreement to supply transmissions to Chrysler and related financing necessary to develop a new facility in Tipton, Indiana.
“Chrysler has rejected the financing structure that Getrag had offered together with its banks, which required Chrysler to secure some of their obligations under the supply agreement, and has elected to terminate the supply agreement and related documents,” the supplier said in a statement.
“Getrag is astonished by this action and will pursue all rights and remedies under the terms of the supply agreement for, among other things, reimbursement of all expenses incurred by Getrag and its suppliers in connection with the project.
“With respect to the pending lawsuit, Getrag maintains that Chrysler’s claims are without merit.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataA Chrysler UK spokeswoman told just-auto the dispute involves only one Getrag operation – in the US – and that the company is nonetheless receiving shipments of the newly launched, export-only diesel Dodge Journey automatic minivan which combines a Volkswagen two-litre turbodiesel with a Getrag twin clutch transmission.
Chrysler had said earlier this month the dispute was unrelated to any other supply agreement the company has with Getrag including the European-made dual clutch transmission for Chrysler products sold in international markets.
Chrysler sued Getrag on 7 October charging that Getrag and its US subsidiary Getrag Transmission Manufacturing misrepresented its ability to secure financing to support the joint development of a manufacturing plant in Tipton, Indiana, to build the dual clutch transmissions, which would be purchased principally by Chrysler for use in its vehicles, in breach of their agreements with Chrysler.
“Getrag was obligated under these agreements to obtain debt financing,” Chrysler said. Contrary to Getrag’s representations to Chrysler, Getrag knew that it could not obtain debt financing within the required time frame, and also knew that unless Chrysler was willing to assume significant additional obligations, debt financing could not be obtained at all. Getrag also failed to use good faith efforts to secure the financing.
“Despite this conduct, Getrag expects Chrysler to reimburse costs Getrag has incurred in connection with the project.
“Chrysler brings this civil action to recover all damages it has sustained as a result of defendants’ wrongful conduct and to obtain a judgment declaring that it has no obligation to reimburse [the] defendants’ costs related to the Tipton plant.”
Chrysler added it was “evaluating its range of possible options to meet its needs for fuel efficient transmissions in future products.”
A US report said Getrag had argued it had arranged financing from a group of German banks provided Chrysler staked US$300m to eventually pay for the tooling. Getrag had said it would counter-sue Chrysler for damages and for reimbursement of the money it already had in the project.
The report said the largely-complete plant is not yet equipped.
A separate news agency report said the dispute left Getrag without a primary customer for the transmissions it expected to make at the new factory and that Indiana economic development officials were hoping Getrag could find a new customer soon.
Getrag and Chrysler announced details of the joint venture last April. Plans called for Getrag Corporate Group and Chrysler to invest around $455m in the new plant with about 1,200 employees making 700,000 ‘PowerShift’ dual-clutch transmissions annually for the automaker from late 2009.
In June it was announced that Getrag Group and Getrag Ford Transmissions would $500m in a joint venture called Getrag Transmission Manufacturing de México to build a new transmission plant
in Irapuato, in the state of Guanajuato.
Also with about 1,200 employees this new independent company will produce around 350,000 dry
dual clutch transmissions annually and is expected to be operational in late 2009 or early 2010.
