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Chrysler denies sales talk

Wednesday, January 14, 2009

Chrysler LLC held an impromptu call with reporters Wednesday to deny a report that it was in talks to sell its Jeep brand and a factory in Illinois, underscoring the challenge the company has now in fending off belief that it will be broken up and go out of business.

A Reuters report stating that Chrysler is in discussions with the Renault-Nissan alliance about a deal to sell Chrysler's iconic Jeep brand is false, Chrysler vice-chairman and president Tom LaSorda said. The report's claim that Chrysler has also discussed selling its assembly plant in Belvidere, Ill. to Canadian auto supplier Magna International Inc. in exchange for long-term production contracts is also untrue, he said.

"It keeps coming up that Chrysler is going to sell certain brands," Mr. LaSorda said. "We will not separate the brands from the company... We're not doing that. We're just not doing that."

Any decision on selling Chrysler as a whole would be up to its owner, New York private equity company Cerberus Capital Management, Mr. LaSorda said, affirming his belief that Chrysler will survive the current downturn.

"This company is going to be around," he said. "We're not going under."

Chrysler may extend the temporary shutdown of its 30 North American factories if sales continue to sag, a company spokesman said. The plants were scheduled to idle for one month starting Dec.19 to adjust to demand.

Mr. LaSorda said there were no talks with Magna about selling the Belvidere facility, which builds the Dodge Caliber, Jeep Compass and Jeep Patriot. He said the automaker and the supplier discussed the designs of the vehicles made in Belvidere, and whether there was "any growth potential" and logic in building them for the Russian market. Those talks broke off in the middle of last year because of the economic uncertainty building in Russia at the time, he said.

Chrysler has already sold the design and tooling for its discontinued Sebring car to OAO GAZ, the car manufacturer controlled by Russian billionaire Oleg Deripaska. Magna helped GAZ in setting up that production line.

Chrysler is seeking to do similar deals in which it would sell non-earning assets to other buyers, Mr. LaSorda said. The automaker would also consider licensing its existing models to outside users, he said.

Chrysler does not yet have any offers for its PT Cruiser line, Mr. LaSorda said. Production of the model ends this summer.

The automaker is talking to Nissan Motor Co. only about its existing manufacturing partnership agreements, Mr. LaSorda said. He said there are no talks with Renault.

Any deal Chrysler does worth more than US$100-million is subject to the approval of the U.S.'s new car czar. The automaker faces a March 31 deadline to engineer a blueprint for its survival as a condition for US$4-billion in loans pledged by the U.S. government.

Magna and Chrysler have deep ties that extend well into the past. Magna and partner Onex Corp. made an offer for Chrysler when it was put up for sale in 2007 but were outbid by Cerberus.

Magna builds vehicles for Chrysler at its Magna Steyr plant in Austria and has outlined ambitions for opening a plant in North America to do similar assembly work.

But doing contract assembly in North America right now "wouldn't be high on our priority list" because vehicle sales are sliding and there is production overcapacity, Magna co-chief executive Don Walker said during the company's last earnings conference call in November.

LINK:Chrysler denies sales talk
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