Chrysler to cut fourth quarter output of Durango SUVs, Ram pickups

Josee Valcourt / The Detroit News AUBURN HILLS -- DaimlerChrysler AG's Chrysler Group will cut fourth-quarter production of Dodge Durango SUVs and Ram pickups as sales continue to slump and the automaker tries to keep bloated truck inventories from growing.

Most of the cuts will be at Chrysler's Newark, Del., Durango plant, CEO Tom LaSorda said Wednesday during a charity event at the automaker's Auburn Hills headquarters.

Chrysler will also ramp up output of some models to meet consumers' growing demand for smaller, more fuel-efficient vehicles amid high gas prices.

LaSorda did not specify which models would see a production gain, but they likely will include the Dodge Caliber, a small crossover, and Jeep Compass, a small SUV.

"We're adjusting production in the fourth quarter from bigger vehicles to smaller vehicles," LaSorda said. He did not detail how deep the production cuts will be for the three months ending December 31.

For the current quarter, which ends Sept. 30, Chrysler is trimming between 65,000 and 75,000 units, or 10 percent of its quarterly output, as it tries to trim ballooning inventory, reduce incentive spending and react to faltering truck sales.

The fourth-quarter cut will amount to about 20,000 vehicles, or a 3.3 percent decline compared to the same period last year, when Chrysler built 605,054 cars and trucks, said Catherine Madden, an analyst with Global Insight Inc., a Waltham, Mass.-firm that follows the auto industry.

Those figures do not include a 10 new cars and trucks Chrysler is launching mainly in the remainder of the year.

"The production schedule should work," Madden said. "But should that situation become worse than what we're forecasting, then it's possible that they'll need to cut more."

Chrysler joins Ford Motor Co. and General Motors Corp. in slashing vehicle output.Last Friday, Ford said it would reduce fourth-quarter truck output by 21 percent, or 168,000 vehicles, the automaker's biggest production cut in three decades.

Earlier this month, GM said it would slow the production of its biggest SUVs in the second half of the year by eliminating overtime at some factories.

GM has not said if it will reduce output of other vehicles in response to sluggish demand. GM is expected to update its fourth-quarter production plans when it releases August sales results early next month

Domestic automakers may be moving toward producing vehicles in response to demand rather than driving sales with incentives, said Matt Vicenzi, an analyst with J.D. Power and Associates in Troy.

"One of the main issues that is being addressed with some of these production cuts is the extent to which the summertime incentive programs were affected this year," he said. "We didn't see as big a response this year as we did to inventory programs last year."

To avoid further output cuts, GM, Ford and Chrysler have to continue to try to attract buyers by pricing vehicles competitively and keeping designs fresh.

Chrysler is attempting to do that with its 2007 Dodge Nitro midsize SUV, which arrives in dealerships in November.

On Wednesday, the automaker announced that the base price for the Nitro, which comes with a standard 210-horsepower V-6 engine, will start at $19,885 -- less than such competing models as the Ford Escape, Nissan Xterra and Chevrolet Equinox with V-6 engines.

"For its competitive set, the pricing seems to be correct," said Christian Wardlaw, an analyst with Autobytel.com, a research Web site for car buyers. "It's lining up very well with the Xterra and the FJ Cruiser. The Nitro has a more moderate design theme so it will appeal to a much broader audience."

The Nitro is expected to sell well when it hits the market, which would give Chrysler a much needed boost after sales for its Chrysler, Dodge and Jeep brands slipped 37.4 percent in July, according to Autodata Corp.

"There's a contingent of loyal Chrysler buyers in this country who have been waiting for a vehicle like this from Dodge," Wardlaw said.

The Nitro, which is built on the same underpinnings as the Jeep Liberty, is Dodge's first midsize SUV. But the heavier Nitro, weighing in at about 4,000 pounds, isn't expected to be as fuel-efficient as its Rubicon Trail-rated Jeep cousin.

"Because it's an SUV and not a (crossover), Nitro's appeal could wane quickly after production," Wardlaw said.

Increasing its presence in the commercial truck segment, Chrysler also announced a starting price of $22,535 for its 2007 Dodge Ram 3500 Chassis Cab -- almost $2,000 less than Ford's F-350 chassis cab.

Photo Credit: www.autoviaggiando.com