Chrysler, ZF Reach Axle Deal

-- Agreement will utilize new Marysville Axle Plant

-- High-tech axle families to deliver improved fuel efficiency

-- Partners cite mutual benefit

Nov 18, 2008, 12:06 ET from Chrysler LLC

MARYSVILLE, Mich., Nov. 18 /PRNewswire/ -- Chrysler LLC and ZF Friedrichshafen AG today announced the formation of a new axle manufacturing alliance. The partnership will utilize Chrysler's new Marysville (Mich.) Axle Plant to build three families of state-of-the-art axles for improved fuel efficiency.

"This partnership gives Chrysler access to advanced axle technologies from a partner that is a leading worldwide supplier of driveline and chassis technology," said Chrysler LLC President and Vice Chairman Tom LaSorda. "Advanced axle technologies are key to our powertrain offensive, aimed at improving the fuel efficiency of our products. And working with a partner allows us to reduce development costs and capital investment requirements. In the end, it's the customer who wins. These axles promise better mileage, better quality and better refinement."

This program will consolidate the number of axles used on the Company's vehicles for greater economies of scale. Included in the program is a family of front-wheel-drive axles and a family of rear-wheel-drive axles based on proprietary ZF designs and a Chrysler-designed rear-wheel-drive axle.

"This partnership with Chrysler and the UAW further demonstrates ZF's intention to increase market presence with axles and to use this as a foundation for future explorations with additional customers," said ZF CEO Hans-Georg Haerter. "It gives us the opportunity to bring a key piece of ZF driveline and chassis technology to a large volume of future North American vehicles with a skilled workforce in a state-of-the-art manufacturing facility."

The Chrysler / ZF axle-making partnership, contingent on state and local incentives, ensures the retention of Chrysler employees and anticipates a phased changeover from current Detroit Axle-centered operations. The Marysville facility is currently under construction, on schedule, with a target production launch in early 2010. The 700,000 square-foot plant is expected to produce approximately 500,000 axles a year.

"This partnership will help retain a solid, long-term foundation for UAW workers employed in axle-making operations," said UAW Vice President General Holiefield. "By partnering with ZF at the new Marysville Axle Plant, our employees may be able to take on additional work -- which is good news for expanded employment opportunities."

The creation of the Chrysler / ZF axle-making partnership will have no negative effect upon any product programs or their timing.

Terms of the agreement were not disclosed.

As outlined in the Company's Recovery and Transformation Plan, partnership opportunities are critical to Chrysler's future success. These opportunities involve new markets, new segments, new potential alliance partners and new sources for components. Chrysler's global strategy builds on the company's historic strengths, including the ability to respond rapidly and creatively to emerging opportunities. Forging strategic alliances is a cornerstone of the strategy.

About Axles

The axle plays a major role in the chassis system as a supporting link between wheels and vehicle body. All forces and movements between wheel and vehicle structure are transmitted via the axle. The drive axle ensures that engine motive power reaches the wheels. The front axle also transmits steering movements to the wheels.

Regardless of their design, axles are mainly responsible for ensuring optimum tire use in all driving conditions. Apart from function, weight, installation space and crash performance are further important aspects of axle system development.

About Chrysler LLC

Chrysler LLC, headquartered in Auburn Hills, Mich., produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. Total sales worldwide in 2007 were 2.7 million vehicles. Sales outside of North America were the highest ever with an increase of 15 percent over 2006. Its product lineup features some of the world's most recognizable vehicles, including the Chrysler 300 and Town & Country, Jeep Wrangler and Grand Cherokee and Dodge Challenger and Ram. The Chrysler Foundation, the company's philanthropic arm, annually supports hundreds of charitable organizations in the United States and throughout the world. In 2007, the Foundation gave approximately $21 million in charitable donations.

About ZF

ZF is a leading worldwide supplier of driveline and chassis technology. Headquartered in Friedrichshafen, Germany, ZF is among the 15 largest automotive suppliers in the world. The company employs approximately 58,000 at 119 locations in 25 countries, and totaled sales of $17.3 billion in 2007.

ZF operates an extensive manufacturing network in North America, combined with global research and development capabilities, to provide advanced technology to the NAFTA region. The ZF Group North American Operations Headquarters and Technical Center is located in Northville, Mich., USA.