Chrysler Scoured the Globe for a Partner

Details of Chrysler's negotiations with automakers around the world surfaced in recent weeks as a federal bankruptcy judge reviewed its case.
Details of Chrysler's negotiations with automakers around the world surfaced in recent weeks as a federal bankruptcy judge reviewed its case. (By Seth Wenig -- Associated Press)
By Tomoeh Murakami Tse
Washington Post Staff Writer
Sunday, May 17, 2009

NEW YORK -- Desperate to keep the automaker alive, Chrysler executives combed the globe over the past two and half years for a healthy and willing partner.

In meetings in Tokyo, Paris, Geneva, Mumbai, Seoul, New York and Chrysler's headquarters in Auburn Hills, Mich., the manufacturer tried to strike a deal with at least 10 companies.

Some of the discussions went far enough to be given names. The Nissan-Renault talks were called Project Go Global. Negotiations with General Motors were known as Project America. Some efforts fell apart in a matter of weeks. An overture to Honda was rejected after just one day. With the clock ticking, Chrysler invited Chinese automakers to buy parts of it in the months leading up to its April 30 bankruptcy filing, but failed to secure any agreements.

The details of Chrysler's search, which have trickled out over the past two weeks in court documents and executives' testimony before a U.S. Bankruptcy Court judge here, illustrate just how bleak Chrysler's situation had become.

The difficulty in securing a partnership also suggests that buyers will not be rushing to compete for Chrysler in the wake of a government-backed sale to Italian automaker Fiat. Interested parties have until Wednesday to place a bid under procedures approved recently by Judge Arthur Gonzales. Chrysler is trying to emerge swiftly from bankruptcy through the sale to Fiat.

The automaker has "already combed the marketplace, and there doesn't seem to be any other real interest," said Howard Seife, who heads the bankruptcy practice at the law firm Chadbourne & Parke.

Seife and others said the condensed time frame for a sale and the complex nature of the transaction -- involving securing agreements with the United Auto Workers union, an array of senior debtholders and the U.S. and Canadian governments that are providing financing for the Chrysler-Fiat deal -- make it even more unlikely that a bidder would step forward.

Chrysler's hunt for a partner began in the fall of 2006, court documents show. The third-largest U.S. automaker needed a partner with expertise in smaller, fuel-efficient vehicles as well as a dealer and distribution network to tap emerging markets, according to court documents and testimony by Tom LaSorda, Chrysler's chief executive at the time.

Discussions with Nissan-Renault kicked off in spring 2007, with the idea that Nissan would make compact cars for Chrysler for sale in North America and Europe, while Chrysler would manufacture trucks for Nissan to be sold through Chrysler's distribution network in the Americas, Chrysler executives said.

In early 2008, the discussions evolved into creating a broad, global alliance. At that point, dozens of executives and employees were pulled from both automakers to conduct a three-month study to analyze potential cost savings across various areas, including marketing and purchasing, testified Scott Garberding, Chrysler's chief procurement officer, who led the effort.

The results of the study were promising, and top-level executives met in Tokyo, Auburn Hills, Paris and New York. But the talks hit bumps over the summer and no deal could be reached, Chrysler executives said in court.

Chrysler tried to engage Volkswagen in early 2008, but the German automaker showed little interest beyond a relatively small project in which Volkswagen would sell minivans made by Chrysler.

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