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Chrysler to buy Sterling Heights plant

by David Zatz on

Sterling Heights Assembly Plant

The current Chrysler Group LLC has reached an agreement with the “Old Carco” to buy the Sterling Heights assembly plant, where the Dodge Avenger and Chrysler Sebring are made. The selling price is $20 million, at the high end of estimates of the plant’s worth, with the sellers likely taking advantage of Chrysler’s need for the plant. The city had threatened to eliminate heavy tax incentives negotiated with “the old Chrysler” if the new Chrysler did not purchase the plant.

Around 1,200 people work at Sterling Heights, but if new products were brought there, that number could double as it went to two or three shifts. Sergio Marchionne had said that Chrysler would need an additional plant going forward, assuming Sterling Heights was closing. He said the plant would need considerable investment in the paint shop and other areas.

The original Marchionne plan was to lease the plant until completely new replacements for the current mid-sized cars were ready. He has stressed the importance of mid-sized cars, given that is a very large market in North America with much higher profit margins than smaller cars; some of the biggest sellers in North America, notably the Toyota Camry, are mid-sized.
Sterling Heights Stamping Plant

The bankrupt company has not received any written offers; estimates of the value of the property were as low as $8.5 million and as high as $21 million.

The sale requires court approval which is likely to occur on March 11. The sale document submitted to the bankruptcy court is 125 pages long. There has been no commitment to new product, but a union official wrote, “having SHAP back under the new company is a great step forward.”

Read more: Sterling Heights Assembly Plant

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