Chrysler May Close Austrian Venture : Automobiles: The European Community wants to add a 10% duty on vehicles made at its minivan plant.
Chrysler Corp. confirmed Monday that it is threatening to shut its joint venture minivan plant in Graz, Austria, if the European Community tacks a 10% duty on vehicles made there.
Chrysler spokesman Tony Cervone confirmed a report in the trade journal Automotive News that said Chrysler Vice Chairman Robert Eaton made the threat last week in Britain.
Eaton, speaking at the dedication for a new distributorship in Britain, also said he would push for retaliation in the form of a 10% duty on European-made cars imported to the United States. The duty now is 2.5%.
Chrysler is upset because it said it participated in the joint venture with Steyr-Daimler-Puch of Austria with the understanding that minivans produced there would be considered as having originated in Europe.
But the European Commission, the executive arm of the EC, has since decided that Austria’s $89-million contribution to the $267-million cost of the plant was far more than the 8% ceiling on state construction aid.
Because Austria is not a member of the European Community, the commission referred the dispute to the 12-nation Council of Ministers, which recommended that Chrysler repay about $67.6 million of the subsidy.
The EC is also threatening to charge a 10% tariff on the minivans.
Chrysler countered by offering to repay about $11 million, but the EC rejected that as inadequate.
Austria has a free-trade treaty with the EC that prohibits subsidies that distort competition.
Chrysler already pays a 10% duty on gasoline-powered Voyager minivans produced at Graz because they do not have enough parts made in Europe to qualify as locally produced. But its diesel engine comes from Italy, qualifying the vehicle as a European domestic.
Chrysler will build about 13,200 Voyagers at Graz this year, of which 9,000 will be diesel. Chrysler plans to build 36,000 to 37,000 minivans at Graz next year, 13,000 to 14,000 of them diesels.
