Chrysler Sues Johnson Controls

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August 18, 2008:

DETROIT -(Dow Jones)- Chrysler LLC (C.XX) is seeking more than $15 million from Johnson Controls Inc. (JCI) over what the auto maker claims are "systematic and deliberate overcharges" for its battery products.

The auto maker claims Johnson Controls provided fictitious weight data under the guise that it could charge Chrysler more for the amount of lead used in its battery products. Chrysler had agreed to pay more to cover increasing lead costs. The auto maker is seeking a jury trial.

The suit was filed in Michigan state court on Aug. 14.

This is the third major public argument Chrysler has had with a supplier since it was purchased by private-investment firm Cerberus Capital Management LP just over a year ago. Two weeks ago, axle maker Dana Corp. (DCN) filed suit seeking to drop its contracts with Chrysler because they were unprofitable.

Earlier this year, Chrysler attempted to pull its machines from supplier Plastech Engineered Products Inc. because of the supplier's financial problems. The company later filed for bankruptcy.

Chrysler's purchasing chief, John Campi, said last week that the auto maker will work with its suppliers but it will no longer be pushed around on financial issues.

Johnson Controls sells batteries to Chrysler for vehicles sold in the Mexico and the U.S. as well as Chrysler's Mopar parts business. The auto maker agreed to make price adjustment for the cost of lead on a per-pound basis.

In April, Chrysler said it began to investigate whether the amount of lead it was receiving in the batteries was the amount being billed to the auto maker. An independent battery laboratory found that the figures were wrong and always favored Johnson Controls by several pounds per battery, according to the suit.

A Johnson Controls spokesperson couldn't immediately be reached for comment.

LINK:UPDATE:Chrysler Sues Johnson Controls For $15 Million In Overcharges