Will 13 new models this year lift ailing Chrysler?

New York Times

Last year, Chrysler rolled out its smallest car, the Dodge Caliber compact. The automaker plans to introduce 13 new models this year.

Automaker wants to reduce reliance on light trucks and offer more fuel-efficient vehicles.

Christine Tierney and Bryce G. Hoffman / The Detroit News

The Chrysler Group is preparing a fresh product offensive, starting with 13 new or updated models coming out this year, as the ailing U.S. division of DaimlerChrysler AG embarks on its second restructuring in six years.

"Between 2007 and 2009, we'll launch more than 20 new products and 13 refreshed vehicles," Chrysler CEO Tom LaSorda said Wednesday.

Over time, the Auburn Hills automaker will prune individual nameplates -- which now number 32 under the Chrysler, Dodge and Jeep brands. But LaSorda said he did not envisage a dramatic downsizing of any of the three brands' lineups. "We'll want to keep a good balance between our Jeep, Dodge and Chrysler brands."

As Chrysler develops vehicles, it aims to reduce its reliance on light trucks, which account for nearly two-thirds of the automaker's U.S. sales, and offer more fuel-efficient vehicles.

The U.S. market's shift away from big vehicles last year hit Chrysler hard. The division lost $1.5 billion in 2006 as its share of the market shrank to 12.9 percent from 13.6 percent a year earlier.

Although gas prices have subsided, Chrysler is assuming fuel prices will rise over the long term. "We're looking at fuel above $3 a gallon," LaSorda said. "We need to align our portfolio as if there will be higher fuel prices."

As part of the restructuring, Chrysler is cutting shifts at assembly plants producing large vehicles such as pickups and sport utility vehicles and increasing its output of small engines. It plans to double capacity to produce four-cylinder engines at the Global Engine Manufacturing Alliance plant in Dundee.

John Schenden, owner of Pro Chrysler-Jeep in Denver and a member of Chrysler's dealer council, said the plans announced Wednesday seem logical. He said Chrysler had already taken action to balance its product offerings.

Its popular Chrysler 300 sedan, launched in 2004, revived Detroit's interest in the passenger car side of the business.

Last year, Chrysler rolled out its smallest car, the Dodge Caliber compact.

In December, it struck a deal to have Chinese automaker Chery Automobile Co. produce a subcompact for the company.

"We just have to be confident that they're going to continue with the product, and they say that they are," Schenden said.

Although small cars tend to be less profitable than larger vehicles, such as SUVs, Chrysler needs to bolster its small-car offerings to attract young buyers, said Jack Nerad, executive editorial director and executive market analyst at Kelley Blue Book's kbb.com auto research site. "You want to get them into your brands and graduate them along."

As Chrysler sets out to develop new vehicles, it is getting some assistance from its sister division luxury carmaker Mercedes-Benz. The two automakers will develop common architecture for vehicles in certain segments, such as compacts and large SUVs, and share more components.

DaimlerChrysler CEO Dieter Zetsche said the joint efforts between Mercedes and Chrysler would not be affected by the company's decision to consider other partnerships for Chrysler.

"We will continue to forge ahead with these projects -- as they benefit everyone involved and contribute to DaimlerChrysler's success," Zetsche wrote in a letter Wednesday to Chrysler workers that was obtained by The Detroit News.

Components-sharing between Mercedes and Chrysler has been a thorny issue from the outset of the 1998 merger. DaimlerChrysler executives have ruled out platform-sharing on the view that it might hurt the Mercedes brand -- and Zetsche reiterated that stance Wednesday.

Schenden dismisses that notion, however. "You don't hear anybody saying, 'I'm not going to buy a Lexus because it has Toyota parts,' " he said.

"It's working pretty well for Toyota and Lexus."

Dealers welcomed Chrysler's plans to cut back production. Last year, Chrysler pressed dealers to take more vehicles than they could sell, straining relations and leading to the departure of sales chief Joe Eberhardt.

Chrysler's restructuring plan calls for a 12 percent reduction in production capacity.

LaSorda, who is acting as Chrysler sales chief, spends a lot of time with dealers.

"I've just said, 'We're going to balance production with the marketplace.' "