Pants on Fire: Romney claim about Jeeps in China

Published October 30 2012

The statement

Says Barack Obama "sold Chrysler to Italians who are going to build Jeeps in China" at the cost of American jobs.

Mitt Romney, in a TV ad

The ruling

Mitt Romney's campaign has produced a controversial ad targeting Ohio voters over Barack Obama's handling of the auto industry. An announcer claims:

"Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China."

We'll walk you through it.

By early 2008, it was clear GM and Chrysler were teetering. Both had huge debts and high costs. Chrysler's owner, Cerberus Capital Management, was hunting for a buyer and talking to Italian carmaker Fiat. In late 2008, President George W. Bush approved billion dollar loans to keep the companies afloat.

On Jan. 20, 2009, the day Obama took the oath of office, Fiat announced it was interested in buying Chrysler. Obama created an auto task force and in March, the task force told Chrysler to cut a deal with Fiat or be cut off from further government loans. In early April, Chrysler filed for bankruptcy and announced an alliance with Fiat.

By the end of April, terms of the deal were complete and by June, it was finalized. Cerberus Capital had lost its stake, and Fiat held 20 percent of Chrysler with full operational control.

Aaron Bragman, a senior analyst with IHS Automotive, a financial research group, said the government couldn't sell Chrysler because it never owned it. In fact, the auto industry and Chrysler were in such bad shape, this wasn't a sale at all in the conventional sense.

"Fiat paid nothing for Chrysler," Bragman said, but "they poured MASSIVE resources into the company, such as design help, executive staff and personnel, joint development, engine technology, all sorts of non-cash things."

Chrysler is now profitable. Laid-off union workers have been rehired, and the company is adding new personnel.

When Fiat got Chrysler, it got Jeep. Right before the ad came out, Romney told an Ohio crowd that plans were afoot to shift the Jeep jobs in Ohio to China.

"I saw a story today that one of the great manufacturers in this state, Jeep — now owned by the Italians — is thinking of moving all production to China," he said.

Romney had been working off an article from Bloomberg News about Fiat's discussions to start making Jeeps again in China. The old Chrysler had assembly plants in China, but they had been idle since 2009.

Romney's words drew an immediate and firm denial from Chrysler headquarters: "Jeep has no intention of shifting production of its Jeep models out of North America to China. A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies."

Bragman said Romney's notion that expansion in China comes at a cost to American workers runs counter to the facts.

The production of cars in China is a sign of Chrysler's growing strength in overseas markets. It would like to build Jeeps in China to sell in China. It is not outsourcing American auto jobs.

"It is a phenomenal success story … one that has sadly been bizarrely twisted out of shape for political expediency," Bragman said.

The ad miscasts the government's role in Fiat's acquisition of Chrysler, and it misrepresents the outcome, stringing together facts in a way that presents an wholly inaccurate picture.

We rate it Pants on Fire!

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