American Motors Corp. said yesterday that it has resolved a payments dispute with the Chinese government that almost wrecked the company's plans to build Jeeps in Peking.
The Chinese government had delayed payments to AMC for parts shipped from the United States and Canada to China's Beijing Corp., 31 percent of which is owned by AMC.
The delinquent payments stemmed from the Chinese government's attempts to alleviate its foreign-exchange shortage by restricting the outlay of currency.
AMC responded by canceling parts shipments, thus jeopardizing the continued existence of Beijing Jeep -- currently an important symbol of American business investment in China.
AMC officials declined to spell out the agreement that they say will remove the impasse "because many of the details still have to be worked out," said William Pelfrey, an AMC spokesman.
The agreement was the product of a series of discussions between AMC and top Chinese government and business officials, Pelfrey said. "Through these discussions, both sides agreed in principle to actions which will enable BJC to continue the Jeep Cherokee program and to accelerate localization," Pelfrey said.
"Localization" means that BJC will produce more parts in China in order to reduce the expense of bringing components in from North America.
Since starting production in September, BJC has built 700 Jeeps for sale in China. The company had hoped to build 4,000 of the vehicles this year. But because of the currency problems and shipping delays, BJC probably will assemble only 2,100 Jeeps this year, Pelfrey said.
The BJC Jeeps sell for the U.S. equivalent of about $19,000.
Jeep production will cease in June for two months "because we're running out of parts," the AMC spokesman said.
AMC invested $16 million -- $8 million in cash and $8 million in technology -- to buy its stake in the BJC venture.