French Parts Maker Sues Chrysler for $110 Million

DETROIT (Reuters) – French auto parts maker Faurecia SA (EPED.PA) 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.

It said sales of the Dodge Nitro were 73 percent below Chrysler’s contractual projections while sales of the Chrysler Sebring and Dodge Avenger sedans were 46 percent below the automaker’s forecast.

Faurecia also claims that Chrysler improperly shared the company’s proprietary design and manufacturing data with an unnamed Chinese manufacturer.

Chrysler’s sales fell 30 percent in 2008, much deeper than the 18 percent decline in U.S. auto industry sales overall.

Last October, Chrysler terminated a supply agreement with German auto parts maker Getrag Transmission Manufacturing LLC to produce transmissions and sued the company for failing to secure a pledged debt financing to build a plant.

The dispute prompted Getrag to file for bankruptcy protection in November.

Chrysler had also sued Canadian auto parts maker Magna International Inc (MGa.TO) to recoup money it spent on a recall involving defective heated seats in minivans.

The case is Faurecia Interior Systems Inc. v. Chrysler LLC, State of Michigan, 6th Judicial Circuit, No 09-098040-CK. (Reporting by Poornima Gupta, Soyoung Kim and Kevin Krolicki; Editing by Phil Berlowitz)