Chrysler Group has agreed the sale of its Austrian Eurostar plant to Magna Steyr. As a result, Eurostar Voyager minivan production in Graz transfers to Magna under contract while PT Cruiser international market and right hand drive assembly shifts back to Toluca, Mexico – after just seven months in Austria.
DaimlerChrysler said the moves would streamline costs for Chrysler Group while continuing strong a operational presence in Europe.
The agreement is subject to the supervisory board approvals of both companies.
Go deeper with GlobalData
“This is an excellent opportunity. The framework for our discussions with Magna focused on two key elements — it needed to make the best business sense for the future of the Chrysler Group and be in the best interest of employees,” said Chrysler Group president and chief executive officer Dieter Zetsche.
“The agreement does that. It enables us to reduce production costs, streamline our asset base, and make better use of existing capacity. The proceeds from this transaction and the savings from these efficiencies allow us to invest more money into developing aspirational products.”
Zetsche did not say how much it cost to set up Austrian production (Job One rolled out of Eurostar last July) and then axe it after less than a year. Chrysler recently introduced 1.6-litre petrol and 2.2-litre Mercedes-Benz diesel engines for export market PT Cruisers.
The Eurostar plant purchase instantly extends Magna Steyr’s Graz operations where the Jeep Grand Cherokee and Mercedes M-class are built in an adjacent factory. The ongoing Voyager MPV production deal in the former Eurostar plant is the result of a separate agreement and surely icing on the component supplier-to-vehicle assembler#;s cake.
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 GlobalDataAs part of the agreement, approximately 800 of the nearly 2,000 Eurostar employees will continue to build the Chrysler Voyager for Magna Steyr.
Meanwhile, the vast majority of the remaining employees are expected to enter a “trust”, which will provide advanced training on the Magna Steyr payroll for an estimated eight to 10 months until the start of a “new project” at the former Eurostar factory.
This is expected to be a new BMW SUV though, unsurpringly, was not officially confirmed.
Eurostar was originally a joint venture to manufacture the Voyager minivans in a 50-50 partnership between Chrysler Austria Ges.m.b.H and Steyr-Daimler-Puch Fahrzeugtechnik AG which began in October 1991. By June 1999, the 55,500 square metre facility was wholly owned by Chrysler.
The terms of Chrysler#;s Eurostar sale to its former partner are not being made public but the sale is expected to be formally completed this summer.
