Chrysler Drops Suit on GM-Toyota Venture
Chrysler dropped its court challenge of the joint venture between General Motors and Toyota on Friday, clearing the last legal obstacle from the path of the joint car-building project in Fremont, Calif.
In an out-of-court settlement of an antitrust lawsuit that Chrysler had filed in U.S. District Court in Washington, GM agreed to remove its managers from the Fremont plant within eight years. But apparently it made no other significant concessions to Chrysler.
Officials added that neither side received any monetary awards as part of the settlement.
GM, which now has 16 managers assigned to the joint-venture facility, originally planned to send executives to work with the Japanese management of the joint venture for the entire 12 years the project is scheduled to last, in order to learn more about Japanese auto assembly methods.
250,000 Cars Annually
But GM said in a statement that it now believes that it can learn all that it needs to know about how the Japanese build cars in eight years.
The 50-50 joint venture, called New United Motor Manufacturing Corp., began production of a Japanese-designed subcompact last December at GM’s former assembly plant. After the plant reaches full production in early 1986, its 2,500 employees will be building up to 250,000 cars a year on two daily shifts.
The joint-venture agreement between GM and Toyota calls for New United to be managed by Toyota for 12 years, with GM’s Chevrolet division initially receiving all of the plant’s output of small cars.
GM and Toyota have never said what will become of the plant after the 12-year period ends, but most observers expect Toyota to assume full control of the facility.
The settlement in the Chrysler suit was reached just in time to head off the start of a trial, which was scheduled to open at the end of this month.
‘Good Face-Saving Way Out’
It was also announced just as Chrysler Chairman Lee A. Iacocca left on a trip to Japan, where he is expected to announce next week that Chrysler will form a U.S. joint venture of its own with Mitsubishi, its Japanese affiliate.
“I think it was a good face-saving way out of the suit for Chrysler,” said David Healy, automotive analyst with Drexel Burnham Lambert, a New York investment firm.
Chrysler filed the lawsuit against the joint venture last year in an effort to block the start of production at Fremont. Chrysler argued that the combination of the largest American auto company and the largest Japanese car maker would be anti-competitive because of the sheer size and market power of the two firms.
Under Friday’s settlement, GM also promised not to order more than 250,000 subcompacts annually from the joint venture, but that limit had already been placed on GM by a consent order issued by the FTC.
