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Chrysler Group sues Daimler over contracts

by Bill Cawthon on

Chrysler Group LLC has joined its unsecured creditors in suing its former owner Daimler AG. However, unlike the creditors, who are suing over Daimler’s alleged past misdeeds, Chrysler is suing because it claims Daimler is not honoring its contracts to supply Chrysler with components now.

The latest lawsuit was filed last Friday in U.S. Bankruptcy Court in New York City.

“Daimler’s conduct threatens to shut down Chrysler Group’s manufacture of key product lines,” according to Chrysler spokesman Gualberto Ranieri who noted Daimler’s actions could shut down production of the Grand Cherokee production at the Jefferson North assembly plant in Detroit and the Dodge Charger, Challenger and Chrysler 300 lines at the Brampton, Ontario plant.

Chrysler says Daimler is refusing to supply steering columns and torque converters, threatening production of new Chrysler vehicles. Daimler claims Chrysler owes it 55 million euros (more than $78.6 million) as compensation for the Detroit automaker’s failure to purchase an agreed-upon number of 2.2-liter diesel engines. In its Friday filing, Chrysler says the shortfall issue was resolved along with other disputes in an agreement made last April 17, before Chrysler LLC filed bankruptcy. The agreement was ratified later by the bankruptcy court.

Ranieri accused Daimler of extortion and said the German company’s conduct is in direct violation of the April 17 agreement.

Daimler spokeswoman Julia Engelhardt said the company rejects Chrysler’s claims, adding, “We believe these claims are without merit, and we will defend ourselves vigorously.”

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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