MRO Magazine

DaimlerChrysler to sell manufacturing assets to Russian carmaker

Auburn Hills, MI -- DaimlerChrysler Corp. has reached an agreement to sell tooling and other assets from its Sterli...


April 27, 2006
By MRO Magazine

Auburn Hills, MI — DaimlerChrysler Corp. has reached an agreement to sell tooling and other assets from its Sterling Heights, Mich., assembly plant to East Coast Trading Company (ECTC), a U.S.-based intermediary exporter. The agreement does not include buildings or real estate. Russian carmaker Gorky Automotive Works (GAZ) will purchase the assets from ECTC.

The assets were formerly used to build the Chrysler Sebring and Dodge Stratus sedans, which will be replaced by new models later this year.

“The sale of our out-going plant tools provides an extended productive life for these high-quality manufacturing assets,” said John Stellman, vice-president – mergers and acquisitions, NAFTA and South America for DaimlerChrysler Corp.

In March 2005, DaimlerChrysler announced it would invest $278 million in its Sterling Heights Assembly Plant to create a state-of-the-art flexible manufacturing operation. As a result of that investment, the operation is currently undergoing a dramatic new model changeover that will give it increased flexibility and efficiency to support its role in Chrysler Group’s future product strategy.


The plant will get new tooling and equipment to build the company’s next generation Chrysler Sebring and Dodge Stratus, and will have the ability to produce a second, small-vehicle line as well.

In addition to purchasing manufacturing assets, GAZ will be granted full-vehicle production rights in Russia and other Commonwealth of Independent States (CIS) countries (Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine). The license will allow GAZ to build and sell cars based on the mid-size Chrysler Group body style under its own brands, with different product names and styling changes to the fascias.

“In DaimlerChrysler, we found a good source of plant tools,” said Erik Eberhardson, vice-president and chief strategy officer, GAZ Group. “We intend to substantially improve the technical level of the automotive products we make.”

GAZ, Russia’s second-largest automotive manufacturer, builds 250,000 cars, minivans and pickup trucks annually and owns approximately 18% of the Russian new vehicle market. Its principle products are the D-segment Volga passenger car and Gazelle/Sobol minivans.

GAZ was formed in the former USSR in 1929. The company began building cars and trucks in 1932 at its plant in Nizhny Novgorod, and today is Russia’s oldest car maker.