Chrysler Group - Chrysler Group Reports June 2007 US Sales, International Sales Highlights

- Chrysler Group car sales rise 55 percent fueled by "Maximize Your Miles" program
- Jeep(R) brand up 19 percent
- Jeep Wrangler increases 93 percent
- Dodge Charger gains 19 percent
- Inventory down by 25 percent or 162,266 units
- Sales outside of North America up 21 percent -- highest month ever

AUBURN HILLS, Mich., July 3 /PRNewswire-FirstCall/ -- Chrysler Group reported sales for June 2007 of 183,347 units; down 1 percent compared to June 2006 with 185,946 units. All sales figures are reported unadjusted.

"In a challenging market, Chrysler Group had softer sales in June than a year ago. We saw strong customer interest in our newly launched, fuel efficient models," said Darryl Jackson, Vice President - U.S. Sales. "Supported by the fuel economy message of our 'Maximize Your Miles' program, Chrysler continued to show strong car sales with an increase of 55 percent over the previous year."

Chrysler brand car sales in June were up 104 percent year-over-year, while Dodge brand car sales increased 30 percent. Chrysler Group's offerings in the car segment include the Chrysler Sebring Sedan and Sebring Convertible, the Chrysler 300, the Dodge Avenger, Dodge Caliber and Dodge Charger.

Jeep brand sales continued to increase in June and posted a gain of 19 percent over the previous year. This result was again driven by the continuously strong Jeep Wrangler and Jeep Patriot. Jeep Wrangler and Wrangler Unlimited posted sales of 10,952 units, up 93 percent compared to June 2006 with 5,674 units. The Jeep Patriot also kept its momentum and finished June with sales of 4,633 units, up 3 percent from May 2007. The vehicle is one of Chrysler Group's recently introduced models that achieve 30 miles per gallon or better in highway driving. In addition, the Jeep Grand Cherokee also posted a gain of 3 percent year-over-year.

The Chrysler Sebring Convertible finished the month with sales of 3,759 units which is 22 percent over May 2007. The recently launched redesigned model offers what no other convertible has offered before - three automatically latching convertible top options: vinyl, cloth and a body-color painted steel retractable hard top, all of which can be retracted with a push of a button on the key fob.

Sales of the Dodge Charger increased in June by 19 percent with 11,529 units compared to 9,710 units in the previous year.

"As our strong car sales in May and June demonstrate, our 'Maximize Your Miles' program resonated well with customers," said Michael Keegan, Vice President - Volume Planning and Sales Operations. "Moving forward, Chrysler Group will extend its low-rate financing plus additional bonus cash in July, with a 0% APR offering for 60 months on select models. These great value packages were successful in the recent months as well."

Chrysler Group finished the month with 485,429 units of inventory, or a 71-day supply. Inventory is down by 25 percent compared to June 2006 when it was at 647,695 units.

Posting its highest month ever of sales outside of North America and sustaining 25 consecutive months of year-over-year sales gains; Chrysler Group's International monthly sales increased 21 percent to 22,901 units in June 2007 compared to 18,971 units in June 2006.

"The strength of our new product portfolio coupled with the support of our dealer network outside North America is driving the growth we have seen so far this year," said Thomas Hausch - Vice President of International Sales. "We expect to maintain the double digit growth this year, including record export numbers, and continue to strategically grow production volumes and sales outlets outside North America for all three brands."

       DaimlerChrysler Corporation U.S. Sales Summary Thru June 2007

                                            Month Sales      DR %    Vol %
                 Model                   Curr Yr    Pr Yr    Change  Change
 Sebring                                 10,249     1,329    643%    671%
 300                                     11,796     9,140     24%     29%
 Crossfire                                1,708       364    352%    369%
 PT Cruiser                              10,047    14,693    -34%    -32%
 Aspen                                    1,846         0      0%      0%
 Pacifica                                 3,861     6,516    -43%    -41%
 Town & Country                           8,151    19,944    -61%    -59%
   CHRYSLER BRAND                        47,658    51,986    -12%     -8%
 Compass                                  3,393         0      0%      0%
 Patriot                                  4,633         0      0%      0%
 Wrangler                                10,952     5,674     86%     93%
 Liberty                                  8,554    12,155    -32%    -30%
 Grand Cherokee                          10,968    10,688     -1%      3%
 Commander                                6,100     8,958    -34%    -32%
   JEEP BRAND                            44,600    37,475     15%     19%
 Neon                                         0       848   -100%   -100%
 Caliber                                 10,815    12,098    -14%    -11%
 Stratus                                      0       778   -100%   -100%
 Avenger                                  8,261         0      0%      0%
 Charger                                 11,529     9,710     14%     19%
 Viper                                       22       106    -80%    -79%
 Magnum                                   2,523     2,281      7%     11%
 Dakota                                   4,812     7,120    -35%    -32%
 Ram P/U                                 31,114    32,375     -7%     -4%
 Caravan                                  9,342    21,937    -59%    -57%
 Durango                                  5,277     7,366    -31%    -28%
 Nitro                                    5,768         0      0%      0%
 Sprinter                                 1,626     1,866    -16%    -13%
   DODGE BRAND                           91,089    96,485     -9%     -6%

   TOTAL CHRYSLER GROUP                 183,347   185,946     -5%     -1%

           TOTAL CG CAR                  55,498    35,739     50%     55%
           TOTAL CG TRUCK               127,849   150,207    -18%    -15%
 Selling Days                                27        26

                                             Sales CYTD       DR %   Vol %
                 Model                     Curr Yr     Pr Yr  Change Change
 Sebring                                   49,046     42,669    13%    15%
 300                                       62,995     73,135   -15%   -14%
 Crossfire                                  6,252      5,221    18%    20%
 PT Cruiser                                53,192     70,153   -25%   -24%
 Aspen                                     12,778          0     0%     0%
 Pacifica                                  32,363     42,468   -25%   -24%
 Town & Country                            75,102     88,887   -17%   -16%
   CHRYSLER BRAND                         291,728    322,533   -11%   -10%
 Compass                                   22,205          0     0%     0%
 Patriot                                   14,969          0     0%     0%
 Wrangler                                  65,651     35,265    84%    86%
 Liberty                                   50,114     70,106   -29%   -29%
 Grand Cherokee                            60,461     72,871   -18%   -17%
 Commander                                 33,742     39,674   -16%   -15%
   JEEP BRAND                             247,142    217,916    12%    13%
 Neon                                           0     16,381  -100%  -100%
 Caliber                                   59,379     43,694    34%    36%
 Stratus                                    1,478     48,564   -97%   -97%
 Avenger                                   40,628          0     0%     0%
 Charger                                   65,972     59,005    10%    12%
 Viper                                        249        743   -67%   -66%
 Magnum                                    15,988     22,013   -28%   -27%
 Dakota                                    29,155     40,497   -29%   -28%
 Ram P/U                                  185,257    183,174     0%     1%
 Caravan                                  103,562    125,813   -19%   -18%
 Durango                                   28,905     38,871   -27%   -26%
 Nitro                                     37,212          0     0%     0%
 Sprinter                                   6,438     10,342   -39%   -38%
   DODGE BRAND                            574,223    589,097    -4%    -3%

   TOTAL CHRYSLER GROUP                 1,113,093  1,129,546    -3%    -1%

           TOTAL CG CAR                   293,219    296,527    -2%    -1%
           TOTAL CG TRUCK                 819,874    833,019    -3%    -2%
 Selling Days                                 154        152


 Global Sales Reporting & Analysis
 July 3, 2007

Source: Chrysler Group

Chrysler, China's Chery to seal vehicle alliance

Reuters |
July 3, 2007 - 10:40 am

DETROIT (Reuters) -- The Chrysler group and China's Chery Automobile Co. will finalize a groundbreaking alliance on Wednesday, July 4, in Beijing that could result in the first Chinese-made vehicles being exported to the U.S. market.

The Chinese government has cleared the deal, a spokesman for Chrysler said today. A formal signing ceremony in Beijing featuring Chrysler CEO Tom LaSorda is scheduled for Wednesday, he said.

"It's a finalization of the strategic framework we've been talking about," Chrysler spokesman Mike Aberlich told Reuters.

Chrysler, being sold to Cerberus Capital Management in a deal expected to close as soon as this month, had been negotiating with Chery to build a small car under a Chrysler brand for sale in the United States and elsewhere.

Closure of the deal had been delayed by the sale of Chrysler by its parent DaimlerChrysler AG.

LaSorda said in May that a newly independent Chrysler was seeking a broader alliance with Chery aimed at small cars and faster-growing emerging markets.

More than 90 percent of sales for Chrysler, which holds the Chrysler, Dodge and Jeep brands, are in North America and the No. 4 U.S. automaker has targeted growth in Europe and Asia as a key sales priority.

Chrysler's Aberlich said that the alliance framework to be signed in Beijing was general and that the two automakers would sign individual contracts for the vehicles that will be produced under the cooperative agreement.

Chrysler and Chery signed a preliminary deal in December that was seen as a major advance toward China's goal of exporting from its fast-growing auto industry into developed markets, including the United States.

Chrysler has said that it needed to find a partner to develop a new small car because of the costs of designing, making and marketing a vehicle in a segment where margins are narrow and consumers expect a low sticker price.

While many industry executives and analysts expect Chinese automakers to eventually compete aggressively in the U.S. market, several early ventures aimed at exporting a Chinese-built vehicle to the United States have faltered or faced setbacks.

Analysts have also cautioned that the first wave of Chinese-built vehicles are likely to face skepticism from American consumers concerned about safety and quality.

Cerberus is acquiring 80.1 percent of Chrysler from Daimler in a $7.4-billion deal expected to close this quarter.

The smallest car in Chrysler's current lineup is the Dodge Caliber, a compact hatchback launched last year.

More than 70 percent of Chrysler's U.S. sales come from light trucks such as Jeeps and Ram pickups, a product skew that analysts have cited as a weakness at a time of high gasoline prices and expected tougher fuel economy regulations.

Chery, a medium-sized auto company in eastern China, has posted fast sales growth in its home market by offering a line-up of inexpensive vehicles.

Chery currently exports vehicles to developing countries and has set a goal of selling 393,000 vehicles in 2007, up 29 percent from 2006.

Chrysler to recall more than 80,000 Wranglers, Nitros

Reuters |
July 3, 2007 - 1:20 pm

DETROIT (Reuters) -- The Chrysler group today said it would recall 80,894 Jeep Wrangler and Dodge Nitro models from 2007 to eliminate the potential for a brief interruption of electrical power to the instrument cluster and the engine.

The automaker said the National Highway Traffic Safety Administration had received about 180 complaints of engine stalling in Wrangler and Nitro vehicles.

Chrysler, in the process of being sold by DaimlerChrysler AG, said it would begin notifying owners later this week and the work would be completed at no cost to owners.

Faith Hill, Tim McGraw auction off Jeep on eBay

Tuesday, July 3, 2007 – Faith Hill and Tim McGraw, along with "Soul2Soul Tour 2007" sponsor Jeep, will auction a 2007 Jeep Wrangler Unlimited Rubicon 4x4 in a charity auction on eBay. The Jeep was donated by Faith and Tim's Neighbor's Keeper Foundation and the Jeep brand.

Bidding will begin at eBay on Wednesday, July 4th. To bid, users are invited to go to eBay.com/JeepSoul2Soul. Bids will only be accepted until midnight on Saturday, July 14th when the charity auction will close. The winner will be recognized by McGraw and Hill at the Aug. 4 show in Las Vegas.

The winning bidder will also receive a trip for two to Las Vegas that will include round trip airfare, hotel and ground transportation, two tickets to the "Soul2Soul Tour 2007" concert and the opportunity to meet the singers backstage prior to their performance. The winner will receive a guided tour of the backstage area, dinner backstage with members of the "Soul2Soul Tour 2007" crew and autographed tour merchandise.

McGraw and Hill's Neighbor's Keeper Foundation was founded in 2005 to provide funding for qualified community charities selected to impact those in need. Thus far, the organization has raised more than $1 million to benefit those affected by Hurricane Katrina.

2008* DaimlerChrysler Cars RED Indicates changed or new information
The lead time represents the estimated order to delivery period under normal conditions and does not take into consideration holds or delays. Extended lead times (when available) are noted under the Key Production Hold or Delay column. *All models and constraints are for the 2008 MY unless noted otherwise. ** Orders should be placed at least 30 days prior to the option’s final build date for all DaimlerChrysler vehicles. Due to various assembly plant assignments for specific model lines or ordered options; the DaimlerChrysler constraints listed below may or may not apply at the time an order is placed.
MODEL	ESTIMATED LEAD TIME IN WEEKS	KEY PRODUCTION HOLD OR DELAY

Chrysler 300/300C, Dodge Magnum, Dodge Charger	TBD	AWD has a Job #1 of 9/4/07 (29S) Pkg. has a Job #1 of 9/4/07 (LXCS48) (29R) Pkg. has a Job #1 of 9/10/07 (LXDP48), 9/17/07 (LXDP49) and 9/25/07 (LXCS48) (PKG) Light Sandstone has a Job #1 of 9/17/07 (PBG) Clearwater Blue Paint has a Job #1 of 10/8/07 (RSV) Satellite video has a Job #1 of 10/8/07 (LMP) HID headlamps have a Job #1 of 11/1/07 (29V) Pkg. has a Job #1 of 12/3/07 (LXDP48)
Chrysler Pacifica	TBD	(29W) Pkg. has a Job #1 of 9/3/07 (PHF) Deep Crimson Crystal paint has a Job #1 of 10/22/07
Chrysler PT Cruiser	TBD	(PA4) Silver Steel paint has a Job #1 of 9/3/07 (PBS) Borden Blue paint has a Job #1 of 9/24/07 (PPL) Melbourne Green paint has a Job #1 of 2/4/08
Chrysler Sebring Sedan	TBD	None
Dodge Avenger	TBD	None

Dodge Caliber	TBD	None
Jeep Compass	TBD	None

2008* DaimlerChrysler Trucks RED Indicates changed or new information
The lead time represents the estimated order to delivery period under normal conditions and does not take into consideration holds or delays. Extended lead times (when available) are noted under the Key Production Hold or Delay column. *All models and constraints are for the 2008 MY unless noted otherwise. ** Orders should be placed at least 30 days prior to the option’s final build date for all DaimlerChrysler vehicles. Due to various assembly plant assignments for specific model lines or ordered options; the DaimlerChrysler constraints listed below may or may not apply at the time an order is placed.
MODEL	ESTIMATED LEAD TIME IN WEEKS	KEY PRODUCTION HOLD OR DELAY
Chrysler Town & Country Dodge Grand Caravan	TBD	(PXR) Brilliant Black paint has a Job #1 of 9/5/07 (PBD) Marathon Blue paint has a Job #1 of 9/24/07 (PBG) Clearwater Blue has a Job #1 of 10/1/07 (PHF) Deep Crimson Crystal has a Job #1 of 10/1/07 (AMA) Premium Sound Group has a Job #1 of 11/5/07
Dodge Dakota	TBD	None
Dodge Durango	TBD	None
Chrysler Aspen	TBD	(2TG) Pkg. has a Job #1 of 9/4/07
Dodge Nitro	TBD	None
Dodge Ram Pickup DR 1500, 2500, 3500 and Mega Cab	TBD	(AR9) Single Rear Wheel Group w/ (SKS/SKT) heavy duty front springs has a Job #1 of 9/10/07 (AR9) Single Rear Wheel Group w/ (DG3) 6-speed auto transmission has a Job #1 of 9/10/07 (DC8L63)
Jeep Grand Cherokee	TBD	None
Jeep Commander	TBD	None
Jeep Liberty	TBD	(JHC) Rain sensitive wipers have a Job #1 of 1/14/08
Jeep Wrangler	TBD	None
Jeep Patriot	TBD	None

DaimlerChrysler AG Reports 2 Percent Decrease in U.S. Sales for Passenger Vehicles for June 2007

		DaimlerChrysler logo. (PRNewsFoto) NEW YORK, NY USA

    NEW YORK, July 3 /PRNewswire-FirstCall/ -- DaimlerChrysler AG (NYSE:
DCX), the third largest U.S. auto maker, today reported total group sales
of 202,936 passenger vehicles in the U.S. for June 2007, a 2 percent
decrease compared to June 2006. All sales figures in this release are on an
unadjusted basis unless otherwise noted.
   (Logo: http://www.newscom.com/cgi-bin/prnh/20020212/DCXLOGO )
   Chrysler Group, consisting of the Chrysler, Jeep(R) and Dodge brands,
posted sales of 183,347 vehicles in the U.S., a 1 percent decline in June.
Spurred by the "Maximize Your Miles" ad campaign which highlights the fuel
efficiency of its new cars and small SUVs; Chrysler Group combined car
sales increased 55 percent for the month. In addition, led by the sales
momentum of the Jeep Wrangler, total Jeep brand sales rose 19 percent in
June. Following its most aggressive product launch in company history of 10
all-new vehicles in 2006, Chrysler Group continues its product offensive
with the launch of eight all-new vehicles in 2007.
   MBUSA's sales highlights for the month include gains from the
entry-level of the Mercedes portfolio, the C-Class, to its high-end
CL-Class. Compared to June of last year, C-Class sedans posted a 12 percent
increase (4,776 vs. 4,250 units), and CL-Class coupes recorded a 322
percent jump (266 vs. 63 units). Year-to-date, MBUSA recorded its best
first-half of the year ever with 118,240 units sold in the first six months
of the year, a 3 percent increase over the same period last year.
   Detailed vehicle sales information for MBUSA and Chrysler Group will be
announced later today in separate press releases issued by the groups. June
2007 had 27 selling days and June 2006 had 26 selling days.
          DaimlerChrysler AG U.S. Sales Summary Through June 2007

                        Month Sales       %         Sales CYTD          %
                     Curr Yr    Pr Yr    Change   Curr Yr    Pr Yr    Change
   CHRYSLER GROUP    183,347   185,946     -1%
 1,113,093  1,129,546   -1%
   MERCEDES-BENZ USA  19,589    20,802     -6%     118,240    114,935    3%

   DAIMLERCHRYSLER  202,936   206,748     -2%
 1,231,333  1,244,481   -1%
   Selling Days          27        26                 154        152
   Further information from DaimlerChrysler is available on the internet
at: http://www.media.daimlerchrysler.com

June Auto Sales: DaimlerChrysler

Associated Press 07.03.07, 11:30 AM ET

DaimlerChrysler AG said Tuesday its June U.S. auto sales fell on reductions in demand for vehicles in both its Chrysler and Mercedes divisions.

DaimlerChrysler (nyse: DCX - news - people ) sold a total of 202,936 vehicles, down 1.8 percent from 206,748 in June 2006.

Adjusted for one additional selling day in June 2007 compared with June 2006, DaimlerChrysler sales fell 5.5 percent.

Sales of the automaker's U.S.-based Chrysler Group vehicles slid 1.4 percent to 183,347 from 185,946, while Mercedes division sales dropped 5.8 percent to 19,589 from 20,802 in the year-ago period.

So far this year, DaimlerChrysler sales are down 1.1 percent to 1.23 million vehicles from 1.24 million in the first six months of 2006.

Adjusted for two additional selling days in the first six months of 2007 compared with the same period of 2006, DaimlerChrysler sales fell 2.3 percent.

DaimlerChrysler shares rose 18 cents to $93.40 in morning trading.

Chrysler Jeep Superstores Thunder Over Michigan Airshow Media Day Thursday, July 5, 2007

    DETROIT, July 3 /PRNewswire/ -- The "Chrysler Jeep Superstores Thunder
Over Michigan" Media Day is Thursday, July 5, 2007 at Willow Run Airport.
The world famous U.S. Navy Blue Angels, "Top Gun" jet aerial demonstration
team in its only Michigan area appearance will practice at 3:00 p.m. and
will be available for interviews from 4:00 p.m.- 4:30 p.m.
   Reporters and editors seeking contact with and information about
"Chrysler Jeep Superstores Thunder Over Michigan" Airshow and the Blue
Angels may do so by calling the above contacts.
   Blue Angels pilot number seven in the group's F/A-18 Hornet fighter
jets is Major Nate Miller, a Lapeer, Mich. native.
   More than 90 aircraft will be featured in both the air and on the
ground. In addition to the Blue Angels, aerobatic displays will also
include the U.S. Air Force F-16 Viper demonstration, a Soviet MIG-17F, and
the world-famous pilot Sean Tucker in the Oracle Challenger.
   The two-day "Chrysler Jeep Superstores Thunder Over Michigan" airshow
at historic Willow Run airport is July 7 & 8, 2007. Aircraft tours,
aviation souvenirs, kids' play area and summer family fun are all included
with discounted admissions as comfortable as $15 in advance with children
15 and under free.

Happy Seat gives boost to Chrysler workers at Mich. plant

7/3/2007, 8:18 a.m. EDT The Associated Press

STERLING HEIGHTS, Mich. (AP) — The Happy Seat is giving a boost to workers at Chrysler's Sterling Heights Assembly Plant.

The seat — designed so they could work inside vehicles on the assembly line with less strain — was designed with the help of workers, who had aching backs and sore joints from their work, the Detroit Free Press reported Tuesday.

On the assembly line recently, Aaron Ellington, 39, used the Happy Seat to slide into vehicles. In the past, such work was tough for Ellington, who is slightly taller than 6 feet and weighs 270 pounds.

"It was a pain the back," he said. The Happy Seat "beats having to lean into the car."

The Happy Seat is one of a handful of changes designed to make jobs easier, injuries rarer and quality better at the plant, which makes the Sebring sedan and convertible for DaimlerChrysler AG's Chrysler Group.

Workers advised engineers and company officials to craft tools for the plant, such as a device called the Spider Fixture, which has tentacles to reach across an open convertible body and measure the glass fit.

___

Spied: 2008 Jeep Wrangler

An American icon about to be reborn

By Editors of Motor Trend
Photography by Brenda Priddy & Company, Editors of Motor Trend

The Jeep Gladiator Concept, from the 2005 Chicago Auto Show.

After years of showing concepts for what the next Wrangler could look like, including the memorable all-wheel-steer, twin-Hemi Hurricane, Jeep is preparing to unveil the production model. The "TK" Wrangler draws heavily on the styling from the Gladiator pickup concept, giving crisp edges to a very heritage-rich design. Building on the success of the Wrangler Unlimited, and great reaction to the Jeep Dakar concept, the TK will launch as a two-door model to be followed by a four-door variant. Base engine is expected to be a 2.4L I-4, with the Liberty-sourced 3.7L V-6 replacing (finally!) the long-lived 4.0L inline six. The longer-wheelbase model is expected to be offered with a 4.7L V-8, giving it greater hill climbing and towing ability. While rumors circulate about the Wrangler moving to an independent front suspension, we expect this Trail Rated icon to continue to use solid axles, front and rear. So, the formula remains the same, but the new Wrangler promises to gain some much needed refinement without losing its rugged charm.

	This Day in Auto History: 7.3.1898 The Nederlandsche Automobiel Club is founded in Utrecht 7.3.1914 Ernest R. Sternberg, a truck design consultant with Sterling, White, and Autocar, is born 7.3.1921 Oreste Fraschini dies in Turin, Italy at age 54 7.3.1935 Andre Citroen dies in Paris, France at age 57 7.3.1954 William B. Livingston of GMC dies in Chicago, IL at age 56

Source: Automobile History Day By Day, by Douglas A. Wick

'New' Chrysler plans debut party

Automaker, dealers to celebrate return to American ownership

Christine Tierney / The Detroit News

Soon-to-be-single Chrysler is sending out invitations and party kits to its 3,700 dealers to celebrate its rebirth as an all-American company.

Chrysler hasn't set the date but has told Chrysler, Dodge and Jeep dealers the big event is likely to take place between July 25 and Aug. 10, after DaimlerChrysler AG completes the sale of the Auburn Hills automaker to Cerberus Capital Management LLC.

The new company, which will be called Chrysler Corp., also will reach out to consumers with bold TV, radio and print advertisements, according to a memo sent to dealers that was obtained by The Detroit News.

Chrysler spokesman David Barnas declined to discuss details but confirmed the company was planning a big coming-out event.

"We're including the entire family in our plans to launch the new company, including our dealer body," he said.

Dealers have been seeking reassurance from Chrysler after months of uncertainty following the Feb. 14 announcement that the automaker was up for sale.

"It's a great idea," dealer Ken Zangara of Zangara Dodge in Albuquerque, N.M., said of the "New" Chrysler premiere event.

"It's very exciting to be an American company once again. It's positive for Chrysler and its employees, and for dealers and their employees," Zangara said.

Houston dealer Alan Helfman is lining up local musicians for the big night and planning a buffet.

"I'll probably do chicken wings. I'm going to do Hickory Barn Bar-B-Q sausage on a stick. Maybe I'll do a little dirty rice," said Helfman, vice president at River Oaks Chrysler Jeep. "It's going to be a nice evening."

Chrysler had proposed to offer customers free oil changes for their vehicles as part of the event but dropped that idea after sounding out dealers.

The company is studying other possible rewards, such as coupons, to attract prospective car buyers. It will send dealers banners to hang in their showrooms and decorations featuring Chrysler's new logo.

"The 'New' Chrysler is the beginning of an important new chapter in Chrysler's history," Chrysler sales executives Darryl Jackson and Mike Keegan said in the memo.

The cost to launch the "New" Chrysler, including the party kits and advertising campaign, is expected to run in the tens of millions of dollars.

Chrysler's bid to reinvent itself as an American company will have little impact on consumers "unless they can take that and say, 'American means this when it comes to brand image and design,'" said Wes Brown, a partner at Iceology, a brand consulting firm in Los Angeles.

"If they can do that, then maybe you've got something if you find that emotional connection with consumers," he said. "They need ultimately to decide who they want to be, and make sure the product line supports that."

EU Approves Chrysler Sale to Cerberus

Associated Press 07.03.07, 7:31 AM ET

European Union regulators on Tuesday cleared the private equity firm Cerberus Capital Management's plan to buy most of the money-losing Chrysler car division from German parent DaimlerChrysler AG.

The European Commission approved the deal automatically after receiving no complaints from rivals and identifying no antitrust problems within a deadline of 25 working days. It was the last major regulatory approval needed for the $7.4 billion deal after U.S. regulators waved it through last month.

DaimlerChrysler (nyse: DCX - news - people ) - the maker of Mercedes luxury cars - agreed in May to transfer an 80.1 percent stake in its U.S.-based Chrysler unit to New York-based Cerberus.

As part of the deal, Cerberus agreed to invest $6.1 billion in Chrysler and its financing arm and to pay DaimlerChrysler $1.4 billion.

DaimlerChrysler would remain liable for certain expenses that could result in it paying Cerberus up to $1.5 billion to complete the transaction.

Cerberus, however, has agreed to take on $19 billion of the auto company's long-term retiree health care costs.

The Chrysler purchase expands Cerberus' automotive holdings, which include a 51 percent stake in GMAC Financial Services. It also owns Guilford Mills, the largest automotive seating supplier in the U.S., and Peguform Group, a German-based manufacturer of interior and exterior plastic parts used in autos.

Discounts seen fueling U.S. auto sales in June

Reuters |
July 2, 2007 - 3:50 pm
DETROIT (Reuters) -- Generous month-end consumer discounts fueled U.S. car and truck sales in June as cash rebates and interest-free loans offset concerns about high gasoline prices and a slowing economy, analysts said.

"Sales appear to have picked up nicely in June, following the lackluster selling rate of the past three months," Lehman Brothers analyst Brian Johnson said. "This is largely due to a sizable increase in incentives so far this month, and the generous new marketing programs."

General Motors and Ford Motor Co. last week began offering qualified buyers zero-percent financing for three years plus additional cash on select vehicles as they tried to boost sales at the end of the month.

The Chrysler group also has heavy rebates on its vehicles, including as much as $6,000 off its Dodge Ram pickup trucks.

Detroit's automakers have been struggling to hold their retail market share amid near-record-high gasoline prices, a weak housing market and fierce competition from Japanese rivals led by Toyota Motor Corp. -- which earlier this month announced its own rebates of up to $3,500 on the Tundra pickup truck and interest-free financing.

New U.S. vehicle sales are expected to come in flat to as high as 16.8 million vehicles on a seasonally adjusted annual rate basis for June, according to analysts.

That compares with last June's 16.2 million-unit rate and May's 16.16 million.

Automakers report June sales on Tuesday. There were 27 selling days in June 2007, compared with 26 during the same month in 2006.

Across the industry, vehicle sales are down 1 percent so far this year as concerns over the economy have caused consumers to hesitate in purchasing vehicles.

GM's vice president of sales, Mark LaNeve, told reporters earlier this month that the overall U.S. auto market remained "challenging" but "not awful."

Some analysts earlier had predicted a second-half recovery, but economic concerns are causing a review of those forecasts.

"Chances of a sales recovery in (the second half) now seem less likely, given high gas prices, continuing pressure on the housing market and potential future increases in interest rates," JP Morgan analyst Himanshu Patel said in a recent note to clients.

Sales of pickup trucks and sport utility vehicles have also declined in recent months as buyers have preferred more fuel-efficient passenger cars and crossovers, or car-based utility vehicles.

The trend seems to have continued in June, according to Edmunds.com.

GM sales likely fell 2 percent, reflecting good retail sales offset by a large reduction in sales to the daily rental companies, while Ford's sales were likely down 6 percent, Lehman's Johnson said.

Both GM and Ford have said they would reduce sales to daily-rental fleets by 20,000 vehicles in June.

Some analysts, including Jesse Toprak, executive director of industry analysis for Edmunds.com and analysts at JP Morgan, estimate GM sales were likely down 10 percent and 12 percent respectively.

Toyota, on the other hand, is expected to post a sales increase of up to 11 percent, while sales for Chrysler are expected to be flat to up 7 percent, according to analysts.

Ford's chief sales analyst George Pipas told Reuters that June-end incentives should help close the month on a strong note.

"Everyone is working harder and enjoying it less," Pipas said.

Daimler delays results to deal with Chrysler sale

By Shawn Langlois, MarketWatch

Last Update: 11:50 AM ET Jul 2, 2007

SAN FRANCISCO (MarketWatch) -- DaimlerChrysler on Monday delayed its second-quarter earnings report for more than a month due to the pending sale of its 80% stake in Chrysler to private equity group Cerberus Capital Management.

The German-American car giant (DCX :

DCX

Last:

Delayed quote data

said that on July 25 it will report its unit sales, revenue and earnings before interest and tax from the Mercedes Car Group, truck group and the van, bus and other segments.

However, the automaker said it is not possible to post financial-services figures because the accounting work of separating the business volume won't be completed by then.

"Chrysler Automotive and Chrysler Financial will be shown in the [second-quarter] financial statements as 'discontinued operations,'" the company said in a release, adding that it intends to publish its full second-quarter statement on Aug. 29.

DaimlerChrysler also said it will split its Mercedes-Benz and truck financial operations from Chrysler when the sale goes through, with the employees moving to a new location in Oakland County, Mich.

About 800 Chrysler workers will remain at the current location while 400 employees of parent Daimler will pack their bags. DaimlerChrysler said the split will create 200 new jobs, including 100 in the area.

Cerberus, one of several private equity firms making big investments in the automotive sector, already owns 51% of GM's financial unit.

DaimlerChrysler stock gained 1.5% to $93.30 in morning trades.

DaimlerChrysler Financial to Split Units

Associated Press 07.02.07, 10:19 AM ET

DaimlerChrysler Financial Services will uncouple its Mercedes-Benz and truck financial operations from Chrysler Financial when Daimler sells its Chrysler Group but employees will remain in Michigan.

DaimlerChrysler (nyse: DCX - news - people ) Financial on Monday announced that it would transfer 400 employees in the Mercedes and truck business units to an office building near DaimlerChrysler Financial's current Americas headquarters in the Detroit suburb of Farmington Hills.

The 400 workers would remain employees of the new Daimler AG once the sale of Chrysler Group to Cerberus Capital Management LP is completed in the third quarter, the company said.

The 800 people who now work for Chrysler Financial will stay at the current headquarters and work under Cerberus.

The split could create another 200 jobs across North and South America, with about 100 of them in Oakland County, Mich., DaimlerChrysler Financial said in a statement.

But company spokesman Jack Ferry would not comment on whether Chrysler Financial operations eventually would be consolidated into GMAC Financial Services. Last year, Cerberus and a consortium of investors bought a majority stake in GMAC from General Motors Corp. (nyse: GM - news - people ) for about $14 billion. Analysts have said buying a big stake in Chrysler would allow Cerberus to combine GMAC operations with Chrysler Financial.

In May, Germany-based DaimlerChrysler announced it would sell 80 percent of money-losing Chrysler to New York-based Cerberus, backing out of a troubled 1998 takeover aimed at creating a global automotive powerhouse.

DaimlerChrysler Financial Services employs 5,600 people nationwide.

Fitch Initiates 'B+' IDR for Chrysler; Rates $12B Secured Bank Loan 'BB+/RR1'

CHICAGO--(BUSINESS WIRE)--Fitch has initiated rating coverage on Chrysler LLC (Chrysler) by assigning the following ratings:

--Long-term Issuer Default Rating (IDR) 'B+';

--$10 billion first-lien loan 'BB+/RR1';

--$2 billion second-lien loan 'BB+/RR1'.

The $12 billion in senior secured financing will be raised following the pending acquisition of 80.1% of Chrysler's parent, Chrysler Holding LLC, by affiliates of Cerberus Capital Management, L.P. The 'RR1' Recovery Rating (RR) is based on Fitch's expectation of full recovery in the event of bankruptcy. The Rating Outlook is Stable.

The rating reflects the severe competitive environment in the U.S. auto market, recent operating losses that are expected to continue through at least 2008, uncertainties regarding the extent of restructuring efforts and the pending UAW contract talks, and a deeply stressed supplier base. The Stable Outlook is based on Chrysler's market share performance since 2000, which has held up fairly well given the stiff competition and capacity expansion of transplant manufacturers as well as shifting buying patterns. The current product lineup across a number of segments, along with near-term new product introductions and a growing export market, should provide sufficient revenue support that will allow cost reductions to improve operating margins over the near term.

Chrysler has made healthy improvements in its North American manufacturing operations since its merger with DaimlerChrysler AG (Daimler). Steady improvement in such key areas as capacity utilization, production efficiency and flexible manufacturing, when combined with the company's market share performance, have limited operating losses despite an uncompetitive cost structure. As a result, Chrysler's restructuring efforts are far less dramatic than at Ford and GM, with only a single assembly plant currently scheduled for closure.

However, over-production by Chrysler in 2006, particularly in larger vehicle segments, created bloated inventories and problematic dealer relationships. Subsequent inventory reductions through the first quarter of 2007 have returned inventories to acceptable levels with an improved mix across product segments. Nevertheless, the inventory reductions were done at a heavy cost, resulting in higher incentives, higher fleet sales, operating losses, lower residual values and damage to brand image.

Consolidated operating results also disproportionately suffered from volume and price deterioration in the key pickup segment due to a cyclical decline in the housing market, heavy incentives, and tough competition from new GM and Toyota products. By the time the Dodge Ram is refreshed, the current version may be the most dated product in the market, although two pending derivatives could enhance its presence in the segment over the near term. Over the longer term, the U.S. manufacturers appear well-positioned to hold or improve their competitive position in this market, and should benefit from any eventual upturn in construction activity. Although Chrysler remains heavily exposed to larger vehicle segments, the company has been proportionately less exposed to the steep decline in mid-size and large SUV's than Ford and GM.

In the second half of 2007, key product introductions include the Dodge and Chrysler minivans, and the Jeep Liberty. Chrysler enjoys a solid market position in minivans, (although the segment remains in decline due to cannibalization by crossover vehicles), and could be poised to capture additional share as Ford and GM contract in this segment. Also supporting volumes and revenues in 2007 and into 2008 are the Jeep Wrangler, Dodge Charger and Dodge Caliber. Balanced strength across a range of new and existing products, including smaller vehicles, should allow production efficiencies achieved over the past several years to positively impact margins, despite continuing price erosion across the industry. However, large SUV products such as the Chrysler Aspen and Jeep Commander were introduced just as this segment was in steep decline.

A primary support factor for the rating is the continuing relationship between Chrysler and Daimler. In addition to a 19.9% stake that Daimler will retain in Chrysler Holding LLC, various agreements will be put in place that will cement the operating and product development ties between the two companies. Areas of cooperation include axles, a common SUV platform, V-6 engine development and more. In particular, a technology sharing agreement provides Chrysler with rights to technologies that are currently in, or designated for Chrysler products. These agreements allow Chrysler to greatly leverage its R&D efforts and capitalize on Daimler's technologies. Chrysler's access to Daimler diesel technology could provide Chrysler with a competitive advantage over the long term as the U.S. market opens to diesel applications.

Chrysler is also seeking to wring major cost reductions and efficiencies out of its production process, through parts commonality, platform-sharing, reductions in engine families, re-sourcing to low-cost countries, both alone and in partnership with Daimler. Although the synergies with Daimler have not met the levels or timeline first envisioned, efficiencies and cost savings will continue to accrue over the intermediate term.

Hourly buyout programs, salaried employee reductions and an expected UAW health care deal (similar to agreements signed by the UAW with Ford and GM) provide confidence that near-term fixed cost savings are achievable. Although Chrysler has announced $3 billion of capital spending related to powertrain products, capital spending will be reduced from heavy investment spending over the past several years.

Although liquidity is very healthy, and more than sufficient to offset near-term operating losses and restructuring costs, Chrysler remains capital constrained and lacks the scale of competitors, particularly in terms of long-term product development. The agreement with Daimler represents a critical offset to this competitive disadvantage, but does not eliminate it. Legislative and regulatory issues, including higher CAFE requirements and emission standards, present long-term uncertainties and are likely to further increase the capital intensity of the industry.

The significant revenue and margin pressures at Ford and GM will require significant changes to the UAW contract terms in order to reverse negative cash flows. Chrysler's fixed cost position are expected to benefit from changes in a number of areas including, outsourcing, use of non-union labor, work rules, job classifications, etc., through both the national contract and through continuing local agreements. Significant uncertainties remain around the results of the upcoming contract talks, and the risks of a labor disruption remain.

Given its liquidity, operating profile and the size of its healthcare liabilities, Chrysler is uniquely positioned among the Detroit-3 in its capacity to finance a final solution to its health care liabilities (along the lines of a Goodyear-style deal). Chrysler is likely to be aggressive in pursuing such a transaction, but it is uncertain that a one-size-fits-all agreement can be reached between the UAW and Ford/GM/Chrysler within the timeline of the current talks.

Chrysler's U.S. pension obligations are fully funded (on a U.S. GAAP basis), and are likely to improve further following 2007 YTD returns and an eventual re-measurement of liabilities that incorporate recent buyouts. Legacy health care liabilities remain an onerous burden on cash flow, but are likely to be reduced through an expected agreement with the UAW and through the hourly buyout program. A healthy percentage of workers accepting buyout packages are taking offers that exclude future health care and pension benefits.

The 'RR1' rating is based primarily on a stress analysis of recoveries valuing Chrysler on a going-concern basis. Fitch also analyzed recoveries against physical assets (incorporating limitations imposed by a borrowing base) and in terms of the market price implied in the current transaction. Fitch's methodology incorporated changes to assumptions on Chrysler's cost-structure, margins and other liabilities that would impact going-concern valuations under a bankruptcy scenario. Recovery values do not benefit from any values associated with Chrysler Financial, given the separate ownership structures.

Fitch's Recovery Ratings (RR) are a relative indicator of creditor recovery prospects on a given obligation within an issuers' capital structure in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors can be found at www.fitchratings.com/recovery.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Driven to Diesels

Ford could be the first to offer a light-duty diesel.

Automakers scramble to offer diesels in light-duty trucks

By RICHARD TRUETT | AUTOMOTIVE NEWS AutoWeek | Updated: 07/02/07, 8:39 am et

AT A GLANCE:

LIGHT-DUTY DIESELS IN THE PIPELINE Ford: 4.4-liter turbocharged V-8 for F-150 and possibly Expedition in 2009 Dodge: 4.2-liter turbocharged V-6 for Ram 1500 in 2010 GM: 4.5-liter turbocharged V-8 for Silverado/Sierra pickups and Hummer H2 in 2010 Nissan: Iffy. May use V-6 or V-8 diesel in Titan pickup from International Truck and Engine Corp. around 2010. Toyota: Iffy. Working with Isuzu to develop diesels. Diesel for Tundra might come from truck affiliate Hino in 2010, at the earliest.

DETROIT -- The Detroit 3 are racing to install fuel-saving diesel engines in their U.S. light trucks. Nissan and Toyota may be in the race, too.

Diesels are common in domestic brands' heavy-duty pickups. But fuel economy concerns and competitive pressures are prompting automakers to put them in light-duty trucks as well.

In 2009, Ford Motor Co. likely will be first to market when it puts a diesel in the F-150 pickup. Last month General Motors became the last of the Detroit 3 to commit to using a diesel in its U.S. light trucks.

News reports indicate that Nissan plans a diesel for its Titan pickup. Toyota officials have said they are exploring a diesel for the Tundra pickup.

Diesel engines, which boost fuel economy by 25 to 30 percent, can't get here soon enough for dealers who sell trucks. Diesels also attract customers because they can tow heavier loads and have higher resale value.

"That's what people have been waiting for," says Shaun Laird, new-truck sales manager at Hummer of Orlando in Altamonte Springs, Fla. "They'll want the diesel engine for both the added towing capability and the fuel economy."

Better mpg

For example, a Dodge Ram 1500 pickup with a diesel should improve its fuel economy from 15 mpg city/19 highway to 19.5 city and nearly 25 mpg highway. A diesel-powered Hummer H2 could get around 16 mpg or higher in highway driving. GM estimates the gasoline-powered version gets 13 to 14 mpg in a combination of city and highway driving.

GM plans to add a 4.5-liter turbocharged V-8 diesel engine to the H2 and light-duty versions of the Chevrolet Silverado and GMC Sierra pickups.

The new engine will be a Duramax, but it will not share any parts with the current 6.6-liter Duramax that GM developed with Isuzu. GM says the new turbodiesel will produce at least 310 hp and 520 pounds-feet of torque and will be made in its Tonawanda, N.Y., plant, which is getting a $100 million makeover.

The engine will fit in the same space as the current gasoline small-block V-8. And, GM says, it could be used in other vehicles.

Nissan, Toyota diesels?

Nissan also appears to be gearing up for a diesel in its Titan. Japan's Nikkan Kogyo Shimbun newspaper recently reported that Nissan will use a diesel engine made by Ford's longtime diesel supplier, International Truck and Engine Corp. International and Nissan officials would not confirm the report.

Nissan spokesman Fred Standish says the company is considering a diesel engine for the Titan.

"If we determine there is a good business case for it, just like any other vehicle, we'll do it," he said. "It's pretty simple."

International's relations with Ford have been strained by a lawsuit and wrangling over price, quality and warranty issues. International is eager to do business with another automaker.

Spokesman Roy Wiley says International has two diesel engines ready to supply and is talking with other automakers. But he would not confirm a deal with Nissan.

"We have a V-6 that we have developed and a V-8, too," Wiley says. "It depends on where they want to put it, but we could get that in a vehicle in less than two years."

Toyota officials have said they want to make a diesel optional in the new full-sized Tundra pickup. Toyota has not said when a diesel would be available or who would build it, but the company is collaborating with Isuzu on diesels. Toyota also could use a diesel from its truckmaking affiliate, Hino Motors Ltd.

Pedal to the metal at Ford

Ford plans to launch a light-duty diesel in the F-150 and possibly the Expedition SUV in 2009.

The 4.4-liter engine is a larger version of the 3.6-liter turbocharged V-8 used in European market Land Rover Range Rovers.

International's lawsuit against Ford says Ford plans to build the engine in Mexico, but Ford officials aren't talking.

Ford officials also won't say who might buy a light-duty diesel truck or whether putting the diesel in an F-150 could cannibalize sales of the bigger, more expensive F-250. But they do make it clear they want to be first.

"Our 30 years of truck leadership is founded on having the most capable and innovative trucks out there," says Ford spokesman Wes Sherwood. "It's important to continue to be the leader by delivering on those principles."

Earlier this year, the Chrysler group confirmed that it will use at least one new engine from its diesel supplier, Cummins Inc., in the Dodge Ram 1500 pickup. The engine is a 4.2-liter V-6 that Cummins developed with the U.S. Department of Energy.

Early test versions cranked out 190 hp and an estimated 570 pounds-feet of torque. Cummins is developing a V-8 based on the same architecture.

Diesels = profit

All Detroit 3 automakers offer diesels in their heavy-duty trucks. The engines are popular and profitable.

About 40 percent of the 796,000 Ford F-series trucks sold in the United States last year were diesel-powered. Diesels are optional in Ford's F-250 and larger trucks.

Sales of GM's heavy-duty Silverado and Sierra diesels are capped at about 200,000 units annually because of production constraints at the Moraine, Ohio, plant. Dodge sold about 150,000 heavy-duty Ram pickups in 2006 with Cummins-built diesel engines.

A diesel costs a consumer an average of $6,660 more than a comparable gasoline engine. But after 4½ years of ownership, a diesel truck is worth $4,700 more than a gasoline-powered truck, according to a study by the Martec Group, a marketing and consulting firm.

Also after 4½ years, the diesel owner has spent about $4,200 less on fuel than the gasoline engine owner, Martec says. Last week the average price of a gallon of diesel fuel was $2.91, 7 cents less than for a gallon of regular unleaded gasoline.

Diesel truck sales generate at least $1 billion in additional profits to the Detroit 3, Martec says.

Kevin McMahon, managing partner of the Martec Group's Detroit office, says automakers likely will charge between $4,000 and $6,000 for diesels in their light-duty trucks over the base engine. And they will make money, he predicts. Consumers, he said, will choose the diesel because it boosts resale value and offers greater fuel efficiency.

Says McMahon: "The (light-truck) customer today is losing ground on fuel efficiency because of the gasoline engine."

Private equity firms interested in acquiring Ford's Land Rover, Jaguar - report

FRANKFURT (Thomson Financial) - Private equity firms Cerberus Capital Management, Ripplewood Holdings and One Equity Partners are interested in acquiring Ford's up-for-sale luxury car units Land Rover and Jaguar, Financial Times Deutschland reported citing sources.

According to the report the three equity firms have already received first financial data on Land Rover and Jaguar.

Cerberus, Ripplewood and One Equity declined to comment, the newspaper reported, adding that Ford said it is examining all options for its units.

Yesterday, The Observer reported several Arab investment funds are also targeting Jaguar and Land Rover.

Cerberus recently acquired DaimlerChrysler AG (nyse: DCX - news - people )'s US Chrysler unit in a multi-bln eur deal.

Chrysler to be US leader in dual-clutch gearboxes

Monday 2 July 2007

Chrysler and its joint-venture partner Getrag have built a $530 million gearbox plant in Indiana to build up to 700,000 dual-clutch transmissions per annum starting in 2009. Chrysler will be paying the 1,070 workers at the new plant, which will mean that it will have exclusive rights for every gearbox that comes off the production line.

Getrag is the owner of the dual-clutch technology, a design that not only improves acceleration but also saves fuel. The first Chrysler cars equipped with the new box should appear by 2010 reports Automotive News, and will be powered by the carmaker’s new Phoenix V6 engine. The gearbox could also replace the current CVT boxes used by some Chrysler models because of a price advantage.

The new dual-clutch gearbox will have six speeds, with a separate clutch to engage gears one, three and five, and another to link gears two, four and six. This design ensures that there’s no power interruption during acceleration, which promises fuel savings of about 6% over conventional transmissions.

Detroit plant wins Chrysler's new SUVs

Jefferson assembly retooled for task

June 30, 2007

BY TIM HIGGINS | FREE PRESS BUSINESS WRITER

Early preparation has begun to retool Chrysler's Jefferson North Assembly Plant so the Detroit facility can be ready to launch the company's next generation of midsized SUVs as soon as late 2009, the Free Press has learned.

The successors to the Jeep Grand Cherokee and Dodge Durango will be assembled at the Jefferson North plant in Detroit, people familiar with the situation said.

The current Grand Cherokee is already assembled at Jefferson North, along with the Jeep Commander, which industry analysts said they believe will be phased out by the summer of 2009, if not earlier.

The Chrysler Aspen and Dodge Durango SUVs are currently assembled at the Newark, Del., assembly plant that will be shuttered by 2009 as part of the automaker's Feb. 14 turnaround plan.

Roger Benvenuti, a spokesman for Chrysler, declined to comment Friday.

The Free Press reported in early February that Chrysler's Jefferson plant could benefit from a major reinvestment if the Delaware plant closed and Durango production was reassigned.

Several analysts said it would be part of the Feb. 14 turnaround plan. But such a development was absent that day.

Instead, the day's news was dominated by the indication that DaimlerChrysler AG would sell the Chrysler Group.

Global Insight analyst Catherine Madden said she expects the new SUVs to launch in late 2009 at Jefferson North.

"It's going to be a pretty massive overhaul," Madden said of the plant. "They're real projects from everything we can tell. ... It is our expectation that they will be built at Jefferson North."

Such a project would mean a significant investment -- several hundreds of millions of dollars -- in the facility, Madden said, "which certainly gives the plant a stronger, brighter" future.

"Just some basic tooling stuff can be a hundred million," she noted.

By getting rid of the Commander, Chrysler would be freeing up space at Jefferson North for another vehicle.

The Free Press reported earlier this year that the company had issued bidding information to suppliers for a new Dodge crossover vehicle that would be built at Jefferson North and was believed to be the replacement for the current Durango.

Erich Merkle, director of forecasting for IRN Inc., said the next generation Durango and Grand Cherokee will share a platform that would probably be used for the replacement for the Chrysler Pacifica, which is assembled in Windsor.

"It might not be called the Pacifica, but there will be some sort of Chrysler variant in there," Merkle added.

"Whenever you have this change in the industry," he said, referring to Chrysler's turnaround plan, "there are always some plants that benefit from that, and then there are others that will lose."

Jefferson North, built in 1991, began production of the Grand Cherokee in January 1992. The plant, which currently employs about 2,400 people, is located within one of Detroit's poorest neighborhoods.

The Grand Cherokee is one of three supremely important vehicles in the Chrysler Group lineup, along with the minivans and the Dodge Ram. In 1999, during the heady days of the SUV business, the Chrysler facility underwent a $750-million expansion so the company could boost production of the Grand Cherokee.

Times have changed, though, and Chrysler has been hard hit by high gasoline prices and consumers' interest in more fuel-efficient vehicles.

Chrysler lost $680 million last year and about $2 billion in the first quarter of this year, a figure largely attributed to the cost of the turnaround plan.

A key measure of the plan includes eliminating 13,000 jobs over three years and closing the Delaware plant.

Beyond cutting costs, the company wants to re-create itself with more fuel-efficient engines and has announced plans to spend $3 billion on developing power trains that get better gas mileage.

Next year, the company plans to sell Aspen and Durango SUVs with hybrid engines.

All of those plans, however, were largely overshadowed by the indication that Chrysler would be sold.

In May, it was announced that private-equity firm Cerberus Capital Management would acquire 80.1% of Chrysler in a deal that is expected to be completed as early as next month.

Even with that announcement, Chrysler has moved forward with planned investments, including $730 million to build an engine plant in Trenton and $700 million to build an axle plant in Marysville.

Despite slow sales, Crossfire will be back in 2008

Not so fast seller: Chrysler Crossfire

Bradford Wernle
Automotive News

July 2, 2007 - 12:01 amDETROIT - The Chrysler Crossfire - once a dramatic symbol of the promised synergies in the DaimlerChrysler merger, a marriage of German technology and American style - has become a bargain bin sports car.

That merger is ending with the sale of Chrysler to Cerberus Capital Management, but the Crossfire will soldier on. The 2008 model goes into production this summer, adding a tire pressure monitoring system and other minor changes.

In 2006, Crossfire orders were suspended because of slow sales. Unsold 2006 and 2007 Crossfires sat in storage in Europe until shipments resumed this spring.

A Chrysler spokeswoman said production of the Crossfire never ceased, but the company stopped taking orders for seven or eight months in North America to "balance" the inventory. U.S. sales fell to 8,216 last year, down from 14,665 in 2005.

In the second quarter of 2007, Crossfire prices less customer cash averaged $27,526, down from $32,460 in the second quarter of 2005, according to Power Information Network data. The base price for the Crossfire coupe when it debuted as a 2004 model was $34,495, including shipping.

Despite the plunge in sales and transaction prices, Chrysler says it's happy with the Crossfire's performance. "We've been outselling the Audi TT," said Chrysler Crossfire engineer Allan Mecca "In our mind, it's meeting expectations."

Sporty sales
U.S. sales of premium sporty cars, first 5 months of 2007

Chevrolet Corvette: 14,703
Mercedes-Benz CLK: 7,038
Chrysler Crossfire: 4,544
BMW Z4: 3,742
Mercedes-Benz SLK: 3,646
Source: Automotive News Data Center

Chrysler confirms 2-tier strategy for Chery vehicles

Rick Kranz
Automotive News
July 2, 2007 - 12:01 am

CHELSEA, Mich. -- Nissan's Carlos Ghosn talks about a $3,000 car.

But the best Chrysler can hope for from China's Chery Automobile Co. is a car that might sell for around twice that price.

Three thousand "is pretty low," said Frank Klegon, Chrysler's executive vice president of product development. "I don't know if I can get a $3,000 or $4,000 car out of China. Maybe, $5,000 or $6,000."

During an interview at a press event here last month, Klegon acknowledged what sources outside the company had been saying for months - that Chrysler is developing a two-tier vehicle strategy with its Chinese partner:

1. Low-tech, low-cost vehicles for such regions as Central and South America.

2. More premium vehicles for the United States, Canada and western Europe.

But while Chrysler expects to sell Chery-assembled vehicles before the end of the decade, the two automakers have yet to sign a contract, he said.

Chery halted negotiations when DaimlerChrysler announced in February that it was seeking a buyer for Chrysler. Cerberus Capital Management LP announced in May that it planned to purchase 80.1 percent of the Chrysler group.

"It is pretty much straightened out," Klegon said. Chrysler and Chery "are on a timetable for signatures, (but) we haven't signed all the stuff yet."

Klegon said Chrysler wants to market low-cost vehicles in South America, Latin America and other regions where emission and safety regulations are less strict. Still to be decided is whether the vehicles will be badged for Chrysler or Dodge.

"Over time, it could be both brands," Klegon said.

Klegon said a vehicle for the United States, Canada and western Europe will take longer to develop. Customers there demand a higher level of refinement and performance than customers in Central or South America who are motivated by price, he said. A time frame was not offered.

Last month, Ghosn told reporters after Nissan's annual meeting in Japan that Nissan and Renault are working on a $3,000 car for India's booming market.

Klegon said that hitting that price may depend on how "car" is defined.

He said that in India, "I have seen what you and I wouldn't necessarily call cars. They are three-wheel-scooter kinds of cars. They get people around, but they would be a little different than what you and I would consider when we first think what is a stripped-out car."