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DaimlerChrysler to Sell Manufacturing Assets from Sterling Heights Assembly Plant

Gorky Automotive Works (GAZ) to Reutilize Plant Tooling

DaimlerChrysler Corp. has reached an agreement to sell tooling and other assets from its Sterling Heights (Mich.) Assembly Plant to East Coast Trading Company (ECTC), a U.S.-based intermediary exporter. The agreement does not include buildings or real estate.

Russian carmaker Gorky Automotive Works (GAZ) will purchase the manufacturing assets from ECTC. The assets were formerly used to build the popular Chrysler Sebring and Dodge Stratus sedans, which will be replaced by new models later this year.

“The sale of our out-going plant tools provides an extended productive life for these high-quality manufacturing assets,” said John Stellman, Vice President – Mergers and Acquisitions, NAFTA and South America for DaimlerChrysler Corp.

In March of 2005, DaimlerChrysler announced it would invest $278 million in its Sterling Heights Assembly Plant to create a state-of-the-art flexible manufacturing operation.

As a result of that investment, Sterling Heights assembly operation is currently undergoing a dramatic new model changeover that will give it increased flexibility and efficiency to support its role in Chrysler Group’s ambitious future product strategy. The plant will get new tooling and equipment to build the company’s next generation Chrysler Sebring and Dodge Stratus, and will have the ability to produce a second, small-vehicle line as well.

In addition to purchasing manufacturing assets, GAZ will be granted full- vehicle production rights in Russia and other Commonwealth of Independent States (CIS) countries (Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine). The license will allow GAZ to build and sell cars based on the mid- size Chrysler Group body style under its own brands, with different product names and styling changes to the fascias.

“In DaimlerChrysler, we found a good source of plant tools,” said Erik Eberhardson, Vice President and Chief Strategy Office, GAZ Group. “We intend to substantially improve the technical level of the automotive products we make. We will offer improved quality for a reasonable price, and I am confident that our customers will appreciate it.”

GAZ also will enter into an exclusive, multi-year supply agreement for the purchase of 2.4-liter four-cylinder engines from Chrysler Group’s Saltillo (Mexico) Engine Plant for use in production of the mid-size vehicle in Russia and other CIS countries. GAZ also will utilize this engine in the company’s Volga and Gazelle vehicles.

GAZ, Russia’s second-largest automotive manufacturer, builds 250,000 cars, minivans and pickup trucks annually and owns approximately 18 percent of the Russian new vehicle market. Its principle products are the D-segment Volga passenger car and Gazelle / Sobol minivans.

GAZ was formed in the former USSR in 1929. The company began building cars and trucks in 1932 at its plant in Nizhny Novgorod, and today is Russia’s oldest carmaker.

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