CAIRO: As Chrysler moves towards bankruptcy in the US, the carmakers’ operations in Egypt are reportedly seeing “business as usual, said Edward Cummins, CEO of Chrysler Group Egypt, in a press conference Saturday.
All activities in terms of vehicle assembly, sales, marketing, service and dealer network will continue normally while the alliance with Fiat Group is being finalized, executives said at the conference
US-based Chrysler LLC has reached an agreement in principle to partner with Fiat SpA, which many expect to become one of the largest players in the global auto market. It also recently announced the “voluntary, and US government-supported, filing for Chapter 11 bankruptcy protection for its US operations.
The move will affect 24 of the company’s wholly-owned subsidiaries in North America.
“The developments in Chrysler’s bankruptcy do not affect Egypt’s operation, explained Cummins, “everything is as it was a month ago concerning the network of dealers who sell Chrysler, the service [centers] and the warranties [granted].
Chrysler LLC chose to file for bankruptcy after it was unable to reach an agreement with its creditors to lower its debt. US President Barack Obama decided in late April to give “Chrysler and Fiat 30 days to reach an agreement.
“This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler’s revival, said Obama in a speech recently. “.I have every confidence that Chrysler will emerge from this process stronger and more competitive.
Cummins said that filing for Chapter 11 does not entail a liquidation of assets, instead, it is meant to expedite the formation of the new company
While the term “bankruptcy is received negatively by the public, Cummins said, “Chapter 11 provides a company with time, under protection of the court, to reorganize its business and/or capital structure before having to meet the financial claims of its creditors.
“The filing temporarily prevents creditors from taking action against the company to collect any monies or property they are owed from before the filing.
The troubled car market in the US – which has seen the Big Three makers Chrysler, GM and Ford struggling to keep afloat – has reportedly not affected Egypt operations.
“We [Chrysler Egypt] anticipated these [developments] and we are prepared. We have vehicles, plenty of parts – consumers should have no concerns, said Cummins
Cummins also said prospective buyers of Chrysler, Jeep and Dodge branded vehicles should “have no concerns about the warranty [since] President Obama [assured] that the US government will stand behind Chrysler.
The press conference started with a video of Obama saying: “After consulting with my Auto Task Force, I can report that the necessary steps have been taken to give one of America’s most storied automakers, Chrysler, a new lease on life.
In the question-and-answer session following the conference, Cummins said, “This alliance will allow Chrysler to add to its portfolio small, fuel-efficient cars, adding that the alliance does not mean Chrysler will abandon bigger cars, widely considered to be gas guzzlers.
This will allow Fiat to use Chrysler’s distribution network in North America, which will include Canada and Mexico under the NAFTA agreement.
At the same time, Chrysler will benefit from Fiat’s technology to producer smaller cars, which would otherwise cost the former “billions of [dollars in] investments.
“Fiat has been out of North America since 1983 and wanted to come back; and Chrysler, under the new alliance, will benefit from Fiat’s facilities in the European Union, Cummins added
Cummins expects the deal to be finalized within 30 days, saying that this filing “will allow a leaner new company to emerge . well-positioned for long-term viability.
He will fly to Rome next week to participate in the negotiations between the two companies.
The new company will be 55 percent owned by Voluntary Employee Beneficiary Association (VEBA) and 10 percent by the US and Canadian governments. Fiat will initially hold a 20 percent stake in Chrysler with the right to increase by 15 percent in three increments.
Fiat cannot become a majority owner until all loans from the US government are repaid.
Chrysler Egypt reported a 50 percent year-on-year increase in retail sales for 2008.