BOI okays transfer of registration of Chrysler brands to Transfarmunit

The Board of Investments (BOI) has approved the transfer of the Chrysler brands from multi-brand assembler Transfarm & Co. to its subsidiary, the Norkis Automotive Resources Corp. (NARC).

With Transfarm stuck in a legal tussle with Daewoo Cars, the company had requested for the transfer of its Chrysler model registrations under the Car Development Program (CDP) to get them out of the imbroglio without hampering production targets.

Approved for transfer were the registration of all Chrysler brands, namely Chrysler Jeep, Cherokee, Grand Caravan, Dakota pickup, Jeep Wrangler, Dodge Durango (both two and four wheel drive models), Neon Base 200 cc and the Stratur 2000 cc.

The transfer will allow NARC to assemble these Chrysler brands while Transfarm will continue to assemble other brands in its Mandaue plant. Chrysler tied up with Transfarm in 1997 and the transfer effectively dissolves the partnership between the two.

Chrysler earlier said that as a marketing strategy, it will introduce only top of the line models, saying it has no intentions of competing head-on with other car assemblers.

Chrysler sports utility vehicles (SUV) models -- which are slowly evolving as an alternative vehicle to sedans -- include the Cherokee, Voyager and Durango. Transfarm has recently been given the green light to import 500 units of Chrysler light commercial vehicles (LCVs) Caravan and Jeep Cherokee at preferential tariffs under the regulated semi knocked-down (SKD) form.

Transfarm's case against Daewoo is still pending at the Securities and Exchange Commission (SEC) despite Transfarm president Luis Quisumbing's statement that the company is still willing to settle the case out of court.

Transfarm has been in partnership with Daewoo Cars, a subsidiary of the third largest chaebol in Korea, since 1994 with a 70-30 percent manufacturing plant in Compostela, Cebu.

With steady sales of 200 to 250 units a month, Quisumbing said the Daewoo line (Racer, Espero, Prince, Cielo and Brougham) has captured roughly seven percent of the market.

In spite of this, however, Quisumbing said Transfarm has no objection to the dissolution of the joint venture and the company is willing to lose the business brought in by Daewoo. "They were not really good partners anyway," he said. "Having said that, Daewoo should have sat down and settled this rather than resorting to this trickery," he said. "After setting this, then we can part ways."

"If they want to register with the Board of Investments on their own, they can do so but then they have to comply with all the requirements," Quisumbing pointed out. "They have to have their own car assembly plant."

There are now two pending court cases filed on the issue: one lodged at the Cebu Regional Trial Court by Transfarm to prevent Daewoo from engaging business in the country without Transfarm and the other filed by listed firm Daewoo as an arbitration case in Hong Kong.

To settle the issue out of court, Transfarm has offered the plant and operations (including the dealership network) to Daewoo for $20 million but has not received any favorable response from the Korean firm.