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Chrysler SA's Wheels Keep Turning

Chrysler South Africa has assured Chrysler, Jeep and Dodge owners in the country that its operations, sales, servicing and warranties on these vehicles will in no way be affected by the bankruptcy application by its parent company in the US.

There is also no question of job losses at the South African head office, where a core team is employed, says a spokesperson for Chrysler SA.

The 40-odd dealers across the country that handle sales and service have their own staff, he explained.

Recent sales have seen Chrysler SA increasing its market share for passenger vehicles to about 2%.

The Voyager is Chrysler's best seller in South Africa and Jeep's is the Wrangler. The Dodge Caliber is the top performer among all the models that Chrysler imports, he added.

Trent Barcroft, executive and managing director of Chrysler SA, emphasised in a statement that the South African company was in a healthy financial position and doing business as usual. Local dealerships were growing with important investments by various retail partners.

The South African company and its dealers will continue to sell and service all models, honour warranties and pay its suppliers. The American government has also given the assurance that all warranties on Chrysler, Jeep and Dodge vehicles will be honoured globally.

Chrysler, one of the biggest names in the American motor industry for the past 85 years, says the bankruptcy application was unavoidable because certain of its funders would not agree to restructuring the debt.

This is not, however, the end of the road for Chrysler because an agreement in principle has been reached with Fiat, by means of which a new company will be established.

Chapter 11 bankruptcy in the US differs greatly from bankruptcy in South Africa. The procedure grants the company protection from creditors for a period to enable it to reorganise its business and/or capital structure, so as to overcome its financial difficulties.

According to Chrysler, it also approached the court under Section 363 of the American Bankruptcy Code to have the agreement with Fiat and the sale of Chrysler's main assets to the new company approved without delay. A new, streamlined company, well positioned for long-term sustainability, could arise within 30 to 60 days. The Obama government is expected to continue to pump in money over this period so that operations can continue normally.

According to CNNMoney.com, Obama said that the bankruptcy application is "one more step on the path to Chrysler's revival" and did not mean that the company has failed.