Chrysler Venture for Fuel-Saving Transmission Likely Dead
October 15, 2008
By Bill Visnic
DETROIT -- A cornerstone of a heavily hyped Chrysler LLC initiative to develop a host of fuel-efficient technologies is on the skids, as Chrysler acknowledges it now is taking legal action against the partner enlisted to help it manufacture advanced, dual-clutch automated manual transmissions.
Chrysler announced last week it is suing Getrag Transmission Manufacturing LLC and its German parent company for misrepresenting Getrag's ability to secure financing for a $455-million joint venture between Getrag and Chrysler to build the fuel-saving dual-clutch transmissions at a new plant in Tipton, Indiana.
Asked if the lawsuit means the venture is dead, a Chrysler spokesman told AutoObserver, "'Dead' might be a little harsh. The matter is in litigation. Hopefully it will be resolved there."
Yet language in a copy of the suit presents a high degree of acrimony between the two companies -- a tension that may be magnified by rapidly eroding business conditions in the auto industry, a growing global credit crisis -- and now, the knowledge Chrysler's majority owner, Cerberus Capital Management, is trying to offload the automaker after barely more than a year of ownership.
Relationship on the Rocks
Getrag announced in April it had signed "definitive agreements" with Chrysler for the engineering, development and manufacture of the dual-clutch transmissions, earmarked as a new, efficiency-enhancing automatic transmission for a variety of Chrysler vehicles. The plant was expected to begin production in late 2009, with a capacity of approximately 700,000 units.
Now, however, Chrysler's suit alleges that Getrag "misrepresented its ability -- and failed to use good-faith efforts -- to secure financing to support the joint development of a manufacturing plant" in Tipton, Indiana. Getrag's securing of satisfactory financing was one of the conditions underlying Chrysler's agreement regarding other investments in the venture, not to mention the eventual price Chrysler would pay Getrag for each transmission.
Chrysler says Getrag was aware it could not obtain the required debt financing for the plant within the specified timeframe and also was aware that other entities involved would require Chrysler to provide security for Getrag's debt. Getrag then allegedly convinced Chrysler to modify the two companies' legal agreements regarding Chrysler's reimbursement to Getrag for its costs if Getrag eventually could not secure the financing necessary to complete the project.
Because of the disagreement, Getrag stopped work at the plant late last year, and only negotiations with Chrysler vice chairman and president Tom LaSorda got the project back on track. But now Chrysler says assurances delivered as a result were bogus.
Prospects Not Hopeful
And although the Chrysler spokesman will not call the project "dead," wording in the lawsuit seems to indicate just that:
"As a result, Getrag and GG LLC have not obtained the Debt Financing necessary for the Project and Chrysler will sustain substantial damages because it will not be able to obtain DCTs (dual-clutch transmissions) from the Tipton Plant for use in its automobiles. Despite this conduct, which will likely result in the Project not being completed, Getrag and GG LLC expect Chrysler to reimburse the substantial costs they have incurred in connection with development of the Project."
If that does not describe a venture that is dead, it depicts one on very rocky ground -- and at the very least almost assuredly unable to meet the original late-2009 production date.
The suit concludes, "Based upon the material misrepresentations made by defendants to Chrysler and related breaches of the (Financing Options Agreement) and the (Transmission Supply Agreement), Chrysler has lost investments in an amount to be proved at trial. Because it relied on the defendants' representations, Chrysler has no alternative source of DCTs, which will result in damages in an amount to be proved at trial as Chrysler attempts to cover by finding a new source of DCTs or alternative transmissions. Chrysler will also suffer lost sales due to its inability to deliver vehicles that include the increased fuel-efficiency provided by DCTs."
It was assumed the dual-clutch automated manual transmissions jointly developed by Chrysler and Getrag would be the perfect complement to Chrysler's next-generation V6, dubbed "Phoenix," and other engines for a wide variety of Chrysler-made vehicles. Development of the DCT was part of a wide-ranging Chrysler initiative, announced in June, 2007, aimed at developing a wide range of fuel-efficient powertrain technologies.
The spokesman said the company currently has nothing more to say about the Getrag situation, but Chrysler's press release announcing the lawsuit concluded, "Chrysler is evaluating its range of possible options to meet its needs for fuel-efficient transmissions for future products."
PHOTO:
Eliminating the clutch pedal, Getrag "Powershift" transmission offers the efficiency of a true manual transmission with the ability to function as an automatic.
Posted by Bill Visnic at 3:00 AM under Business , Chrysler , Featured , News , Technology | Comments (0) | digg this | Seed Newsvine
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