Guatemala Court Rules Against Chrysler Corp.
Decision in long-standing suit to block sales may hinder future plans by the Big Three US automakers to expand in Latin America
RULING on a multimillion- dollar lawsuit, a Guatemalan judge has ordered the Chrysler Corporation to stop selling cars in the Central American nation and has frozen the bank accounts of Chrysler dealers in Guatemala until the corporation pays off the suit.
The financial sting from the lost sales in this tiny market is likely to be minor. But the negative publicity could hurt Chrysler just as it is moving to expand sales in Latin America, auto industry analysts say.
``In terms of the money involved and market potential, this is not a big deal,'' says David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan. ``But in light of the NAFTA [North American Free Trade Agreement], it could be symbolically significant. The Big Three [United States automakers] have big plans for Mexico and Latin America. Depending on how this is played, similar situations could explode elsewhere.''
There are two Chrysler dealers and one Chrysler repair shop in Guatemala. Sales are relatively minimal. ``Clearly, if this is true, this is not going to impact us financially. We're looking at under 50 units sold per year [in Guatemala],'' says Chrysler spokesman Tony Cervone. Last year, Chrysler earned $2.4 billion on sales of $43.6 billion worldwide.
But, Mr. Cervone adds, ``It doesn't mean we aren't taking this case seriously.''
Claims in the case
The suit alleges that 26 years ago, the Kaiser-Jeep Corporation illegally took over the biggest Jeep dealership in Central America, Agencia Nicol, owned by Henry Joaquin Nicol. It then proceeded to run it into the ground, alleges the Nicol family.
The trouble began five years before the takeover.