Chrysler Ponders Possibility of Extending Production Pact with Mitsubishi

12/11/96

Reuters reports that Chrysler has said it is considering extending its car production agreement with Mitsubishi. If Chrysler does so, the step will reverse the carmaker's trend toward cutting ties with Mitsubishi. Chrysler spokesperson Shawn Williams said, "we are discussing the possibility with them, but we haven't reached any conclusions or any decisions yet."

Mitsubishi Motor Manufacturing of America currently makes the Dodge Avenger, Chrysler Sebring and Eagle Talon coupes at a plant in Normal, Ill. That arrangement will expire after the 1999 model year, and Chrysler executives have suggested in the past they want to phase out the company's production involvement with Mitsubishi.

Richard Recchia, Mitsubishi's chief operating officer in the U.S., said in October 1995 that future cooperation between the two automakers would probably be based on component and engineering exchanges instead of complete products.

On Monday, however, Automotive News reported that Chrysler Executive Vice President Thomas Gale led a Chrysler team to Tokyo for talks with Mitsubishi officials about extending the current contract through 2004.

Williams would not comment on the meeting, although Mitsubishi spokesperson Gail O'Brien said the companies have discussed numerous options: "talks have been ongoing, which is totally understandable based on the fact that the contract is scheduled to expire."

Mitsubishi makes its Galant sedan and Eclipse coupe at the plant in Normal, Ill., where it also makes Chrysler's Avenger, Sebring and Talon. Automotive News says Chrysler's products account for 45 percent of the 177,707 units the plant cranked out through November this year.

The Normal plant was founded in 1985 and originally called Diamond Star Motors. At that time Chrysler was a 50-50 partner in the venture with Mitsubishi. In 1993, however, Chrysler sold its ownership stake in the plant back to Mitsubishi.

In Japan Mitsubishi makes Chrysler's dodge stealth and imports it into the U.S. for sale. The two companies also supply each other with engines.

Paul Dever -- The Auto Channel