Wednesday, February 11, 2009

Chrysler News:French parts maker sues Chrysler for $110 million

DETROIT, Feb 10 (Reuters) - French auto parts maker Faurecia SA (EPED.PA: Quote, Profile, Research) has sued Chrysler LLC for $110 million, saying the struggling U.S. automaker failed to pay engineering costs it owed when vehicle sales plunged.

Faurecia claims Chrysler did not reimburse it for the cost to develop and supply components related to four Chrysler vehicle programs including the Dodge Nitro SUV, according to the lawsuit, which was filed in a Michigan court on Monday.

Chrysler, owned by Cerberus Capital Management [CBS.UL], said the claim misrepresented the nature of the contract between the two companies.

"Faurecia has taken huge liberties in this lawsuit, grossly overstating alleged damages and totally absolving itself of any assumption of risk, contrary to our supply agreements with the company," Chrysler spokesman Mike Palese said in a statement.

The lawsuit by Faurecia is one of several disputes between Chrysler and its suppliers to become public in recent months and comes at a time when U.S. auto sales have tumbled to a 27-year low.

Falling vehicle sales and plant shutdowns by major automakers have added to the intense pressure faced by auto parts suppliers from tight credit conditions.

Faurecia supplies a range of parts for Chrysler including the instrument panel, door panels and seats for the Chrysler Sebring and Dodge Avenger sedans.

The company also supplies the exhaust systems for the Dodge Nitro SUV and Dodge Caliber hatchbacks.

Faurecia said sales of the Chrysler vehicles it supplies plunged far below the automaker's initial projection in 2008. Continued...

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