PARIS -- French supplier Faurecia has "excellent" relations with Chrysler and will continue working with the carmaker despite a $110 million breach of contract lawsuit Faurecia has filed in the United States, CEO Yann Delabriere said.
The lawsuit alleges that Chrysler has refused to fully reimburse Faurecia Interior Systems Inc. for engineering, r&d and other up-front costs incurred to supply the automaker with interior systems. The suit was filed Monday in a Michigan state court.
"We have had some problems and we have found a certain number of solutions, but in this specific case we didn't reach agreement," Delabriere told Automotive News Europe during an interview after Faurecia's 2008 results conference Tuesday.
"When you can't reach agreement after months and months of discussion, the best plan is to find an outside arbitrator that will bring you to a solution," Delabriere said.
The lawsuit should have no impact on Faurecia's continuing supply relationship with Chrysler, Delabriere said.
Faurecia supplies components such as center consoles, instrument panels and door panels for four Chrysler vehicle programs: the PT Cruiser, Chrysler Sebring/Dodge Avenger platform, Jeep Liberty and Dodge Nitro vehicles.
According to Faurecia's lawsuit, Chrysler agreed to reimburse it for up-front costs related to supplying interior products to these programs.
The project costs were to be lumped as a surcharge into the per-piece cost of the parts for all four programs, so by the end of the vehicle's life, Faurecia would recover its project investment costs.
The surcharges were to be adjusted if production volumes changed dramatically, according to the suit.
Chrysler has slashed production of the vehicle programs by 46-73 percent below levels forecast when contracts were signed with Faurecia in 2004, according to the suit.
Faurecia contends that Chrysler refused to adjust prices to reimburse it for costs since 2007.
It says Chrysler owes it $45 million in engineering and r&d costs, as well as an additional $58 million in damages linked to Chrysler's failure to adjust its price terms when it cut production of its Sebring, Avenger and PT Cruiser models.
Chrysler issued this statement in response to the suit:
"Faurecia has taken huge liberties in this lawsuit, grossly overstating alleged damages and totally absolving itself of any assumption of risk, contrary to our supply agreements with the company. We are not at liberty to discuss the matter further as it is now in litigation."
Delabriere said the global downturn will increase the risk of disputes over projected and actual volumes between suppliers and their automaker clients.
Faurecia will defend its interest in such cases, Delabriere said. "In extreme cases, we are ready to use strong measures."
Ryan Beene contributed to this report