By Ryan Beene, Crain's Detroit Business
Auburn Hills, Michigan -- Auburn Hills-based auto supplier Faurecia Interior Systems Inc. is seeking $110 million in damages from Chrysler llc in a breach of contract lawsuit filed 9 Feb in Oakland County Circuit Court.
The supplier's suit alleges that Chrysler has refused to fully reimburse Faurecia for engineering, research & development and other up-front costs the company incurred to supply the automaker with interior systems. Faurecia supplies components such as centre consoles, instrument panels and door panels for four Chrysler vehicle programs: the PT Cruiser, Chrysler Sebring/Dodge Avenger platform, Jeep Liberty and Dodge Nitro vehicles.
According to Faurecia's lawsuit, Chrysler agreed to repay the supplier for up-front costs related to supplying interior products to Chrysler's four vehicle programmes. The project costs were to be lumped as a surcharge into the per-piece cost of the parts for all four programs, so by the end of the vehicle's life, Faurecia would recover its project investment costs. The surcharges were to be adjusted if production volumes changed dramatically, according to the suit.
But Chrysler has slashed production of the vehicle programs by 46-73 percent below what it forecast when it signed the contract with Faurecia in 2004, Faurecia said in its suit. Faurecia added that Chrysler has refused to adjust the price to reimburse Faurecia for its costs since at least 2007.
The suit also alleges that Chrysler sourced interior parts production for a related vehicle program to a Chinese manufacturer using Faurecia's designs.
Faurecia says Chrysler currently owes it $45 million in engineering and R&D costs alone, on top of interest.
Faurecia is seeking an additional $58 million in damages it says Chrysler owes because the automaker did not adjust its price terms with Faurecia when it cut production of its Sebring, Avenger and PT Cruiser models.
Mike Palese, Chrysler director of HR, diversity and legal communications, said late on 9 Feb that the company had not been served with the lawsuit, adding it would be inappropriate to comment until Chrysler had a chance to review the allegations.