Speed Read

First Impressions:
You know that guy that goes to McDonald's and orders two Big Mac Extra Value Meals and supersizes both of them and then gets a Diet Coke? This is his new ride.

Featured Specs

• 5.7-liter V8; two electric motors
• 385 horsepower total
• 19 mpg city, 20 mpg highway
• 6,000-pound towing capacity
  

The Gas-Saving Gas Guzzler

By Daniel Pund, Senior Editor, Detroit Email
Date posted: 07-24-2008

Edmunds - Last month the New York Times pointed out that if it weren't for a loophole in the federal regulation of motor vehicles, the 2009 Dodge Durango Hybrid would be eligible for a hybrid-vehicle tax credit and also subject to a gas-guzzler tax.

Now, the folks over at the Times have not always been what you might call tolerant of sport-utility vehicles. In fact, around the turn of this century, when the SUV-as-commuter-car phenomenon was nearing its zenith, you could find plenty of folks around Detroit who were convinced the mighty Times was waging a Holy Journalistic Crusade against vehicles such as the Dodge Durango.

The truth is that the 2009 Dodge Durango Hybrid will be eligible for a hybrid-vehicle tax credit (estimated to be $1,800) and will not be subject to a gas-guzzler tax. When the gas-guzzler tax was instituted as part of the Energy Tax Act in 1978, SUVs and pickup trucks did not represent a significant portion of the mainstream and they were exempted from meeting the minimum threshold of 22.5 mpg (combined).

This inconsistency certainly says more about the federal government's inability to deal with reality than it does about the Durango Hybrid. (Or the Chevy Tahoe/GMC Yukon Hybrids, which fall into the same bizarre regulatory boat.) But, well, the government's simultaneous pat on the back and theoretical slap on the wrist does nicely highlight the paradox that this full-size, V8-equipped SUV represents.

Seriously, what the hell is this thing?

And Eat It, Too
According to the Dodge folks, the 2009 Dodge Durango Hybrid (and the 2009 Chrysler Aspen Hybrid) is a no-compromise vehicle. You can still have your big SUV, with all its towing and hauling capabilities and a huge chrome grille, and get 46 percent better city fuel mileage!

An enticing claim, but it's not exactly what you think. For example, a 46 percent improvement on 13 mpg is still only 19 mpg. This is a notable increase that's the result of sophisticated technology engineered by the four companies involved in developing the two-mode hybrid technology (BMW, Chrysler, Daimler and GM). But for all this investment, cost, complexity and weight, the bottom line here is still just 19 mpg.

That's a lot of fuel (and money) to be saved, yet this is not exactly a miraculous makeover of a boat-towing, people-moving SUV into a fuel-sipping Honda Fit. There are compromises to be made, and whether the compromises of the Durango Hybrid outweigh the benefits is going to depend on your circumstances and needs. Our early experience with this vehicle and past experience with the mechanically similar 2008 Chevrolet Tahoe Hybrid make us believe this SUV hybrid is suited to a very small segment of the population.

Here's how it plays out.

Moot Ute
The traditional body-on-frame SUV like the Durango is not going away, but to say that it is diminishing in popularity is a pretty massive understatement. Both General Motors and Ford will be ditching their midsize body-on-frame trucks in favor of crossovers. And rumor is that Chrysler will be doing the same in the not-so-distant future.

As it turns out, the all-wheel-drive version of the V6-powered three-row GM Lambda crossovers (Buick Enclave, Chevrolet Traverse, GMC Acadia and Saturn Outlook) as well as the new 2009 Ford Flex deliver essentially identical combined gas mileage to the Durango Hybrid's without any expensive hardware, plus the AWD crossovers provide better highway fuel economy. The four-wheel-drive 2009 Dodge Durango Hybrid (it's available only with 4WD) provides better city fuel economy than these AWD crossovers, but of course, the front-wheel-drive versions of the GM crossovers have an overall advantage in fuel economy.

(Incidentally, all of the vehicles we've mentioned here would be liable for a gas-guzzler penalty, were they not exempt. And a diesel-powered alternative would offer better fuel economy than either the Dodge Hybrid or the GM crossovers, but that's another story.)

Two-Mode Hardware
We've got to give Chrysler LLC credit for the way the two-mode hybrid components are discreetly packaged in the 2009 Dodge Durango Hybrid. The battery pack of 300V nickel-metal hydride cells resides under the second row of seats without compromising passenger or cargo room. The twin electric motors are mounted within the transmission case and take up no more space than a conventional automatic. The transmission also carries four gear ratios.

All this hardware developed by the BMW, Chrysler, Daimler and GM think tanks makes the Dodge Durango a two-mode hybrid, a label that the Durango proudly wears. At speeds up to 25 mph under light throttle load, the Durango can run on electric power only. It can also run on gasoline-engine power only. Or it can run on any combination of the two. At higher speeds, electric assist is used when needed.

Of course, since this truck can run on electric power only, it has to be fitted with electric-boosted steering, electrically controlled air-conditioning and electrically controlled brakes. All told, these and all the other portions of the hybrid pie add 300 to 400 pounds to the weight of a comparably equipped gas-only Durango. The result is a hefty 5,553-pound truck, a good half-ton more than a crossover.

Although GM added lots of aluminum (the hood, tailgate, front bumper beam and wheels) as well as lightweight seats to the 2008 Chevrolet Tahoe Hybrid to reduce its curb weight, and then improved the big beast's aerodynamics with a bluff, low-hanging front fascia, the Dodge Durango Hybrid doesn't differ from the standard Durango in these respects.

What It Costs
All that aluminum in the Chevy Tahoe Hybrid costs money. But by changing only what needed to be changed to convert the Durango into a hybrid, Chrysler can offer the 2009 Dodge Durango Hybrid at just $3,600 more than a similarly equipped 4WD Durango Limited. At $45,340 including destination charge, the Durango Hybrid is substantially cheaper than the Tahoe Hybrid, as even the rear-wheel-drive Chevy goes for $50,490.

Chrysler estimates that the 2009 Dodge Durango Hybrid will get 19 mpg in the city/20 mpg on the highway plus 19 mpg combined. The rear-wheel-drive Chevy — which is lighter by a few hundred pounds despite its larger size — gets 21 mpg city/22 mpg highway. Even the 4WD Tahoe, with its rating of 20 mpg city/20 mpg highway, gets slightly better fuel economy than the Durango Hybrid.

Meanwhile, you would have to work hard to get any of the GM Lambda crossovers up to $45,000. Doing so in the Ford Flex would be a little simpler. Either way, the Durango Hybrid's modest price premium reduces the time period in which fuel savings can offset the added cost, but this is an advantage only in relation to other body-on-frame SUVs, not crossovers.

Capacitors and Capacity
The hole card for the Durango Hybrid compared to a unibody, V6-powered crossover is its superior truckiness. In other words, this Dodge can tow more than any sissified crossover. The Durango Hybrid can yank 6,000 pounds — more than the 5,000-pound rating of the Chevrolet Traverse or the 5,200-pound rating of the Toyota Highlander, yet 2,700 pounds less than a standard 4WD Hemi-powered Durango. So the Durango Hybrid can tow a bit more than a crossover, yet substantially less than a standard SUV.

In terms of capacity — as in cargo capacity — things look even more muddled for the Durango Hybrid. A Chevy Traverse offers more maximum cargo space by about the equivalent of a Honda Accord's trunk capacity, while the Ford Flex offers considerably less maximum cargo capacity. So if you're shopping with maximum interior space in mind, the Durango has the same compromises as any body-on-frame SUV.

Oh Yeah, the Drive
But the most important thing that limits the Durango Hybrid's appeal to us is that, for the most part, it drives like a Durango. The driving experience is best described by The Who, which coined the phrase, "meaty, beaty, big and bouncy." A new generation of car-based utes provides better ride quality, handling and braking. The level of sophistication achieved by these new utility vehicles makes us wonder yet again that so many people were willing to overlook the shortcomings of traditional SUVs for so long.

As far as the Durango Hybrid goes, all the shuffling of power sources at low speeds and changing throttle loads adds a confusing array of surges and pauses to the driving experience. This is also true of the General Motors two-mode hybrids and vehicles such as the Toyota Prius. So while this might not be a complaint that pertains exclusively to the Durango Hybrid, it's not exactly a welcome trait, either.

Once up and running, this hybrid feels just like a normal Durango. Just to remind you that this is, in fact, something special, the tachometer has been replaced with an analog power-delivery gauge that features segments that indicate hybrid, gas or electric modes, plus charging, economy and ready modes. This instrument isn't especially useful, as it swings back and forth without telling you anything specific. A schematic of the power flow (similar to that of the Toyota Prius) is displayed on a screen mounted on the center console, and it's a lot more informative, although blinking arrows and colors may be something of a driving distraction.

So What Is It?
So what the hell is this thing, this gas-guzzling hybrid? It's the result of the need to offer three rows of seats in a relatively fuel-efficient package that can tow a boat. The gains are impressive compared to the base model. And nobody is going to complain about getting better gas mileage, particularly at current prices.

But it's hard to imagine the 2009 Dodge Durango Hybrid as anything other than a niche vehicle, a slightly more efficient truck in a world that wants people-moving crossovers. Poor sales of the Chevy and GMC hybrid utes would seem to bear this out.

For most people, most of the time, there are better options currently available.

Edmunds attended a manufacturer-sponsored event, to which selected members of the press were invited, to facilitate this report.

Videos

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First Drive: 2009 Dodge Durango Hybrid

Photos

Slideshow

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A big sport-utility is not exactly the first thing most folks think of when you say "hybrid." (Photo courtesy of Chrysler LLC)

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The Durango Hybrid (and the Chrysler Aspen Hybrid) come only with four-wheel drive to conquer the most intense gravel driveways. (Photo courtesy of Chrysler LLC)

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Once up and running, the Durango Hybrid feels pretty much exactly like a standard Durango, for good and ill. (Photo courtesy of Chrysler LLC)

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Did you know that Dodge refers to the Durango's taillights as "afterburner taillamps?" Neither did we. (Photo courtesy of Chrysler LLC)

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With a maximum capacity of 6,000 pounds, towing is one advantage the Durango Hybrid has over crossover vehicles. (Photo courtesy of Chrysler LLC)

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We appreciate that Dodge didn't plaster "HYBRID" all over the Durango, as Chevy did with the Tahoe Hybrid. (Photo courtesy of Chrysler LLC)

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The Durango Hybrid uses a 345-horsepower 5.7-liter V8 with cylinder deactivation. (Photo courtesy of Chrysler LLC)

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Two electric motors and four fixed gears are crammed into a case the same size as a conventional automatic transmission. (Photo courtesy of Chrysler LLC)

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Dodge estimates that the total combined horsepower of the engine and the electric motors is 385. (Photo courtesy of Chrysler LLC)

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The interior of the Durango Hybrid is all but identical to that of a Durango Limited. (Photo courtesy of Chrysler LLC)

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The tachometer is replaced by a gauge that isn't really of much use. (Photo courtesy of Chrysler LLC)

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With a maximum of 102 square feet of cargo space, the Durango Hybrid can carry many lobsters. (Photo courtesy of Chrysler LLC)

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All Durango Hybrids are loaded to the gills with features like a back-up camera, leather seats and navigation system. (Photo courtesy of Chrysler LLC)

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Unlike the Chevy Tahoe Hybrid, there's no way to tell a Durango Hybrid from a conventional Durango without reading the badges. (Photo courtesy of Chrysler LLC)

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The 2009 Dodge Durango Hybrid. (Photo courtesy of Chrysler LLC)

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This is one way to get three rows of seats, a tow vehicle and relatively decent fuel mileage. (Photo

Chrysler's Project D Avenger, Sebring replacement plan may go platform sharing route

Chrysler's Project D, the plan to replace the disappointing Dodge Avenger and Chrysler Sebring by the 2011, or more likely, 2012 model year, is gobbling up huge engineering and design resources.

Chrysler is considering three or four distinct ways to do the project, which include: 1) Its own all-new platform (the current models are derived from Mitsubishi's LS platform, but Chrysler has done considerable work on it; 2) Use someone else's platform, either Fiat's premium platform, or Nissan's midsize (Altima), with distinct sheetmetal; or 3) Go further on platform sharing, using a Fiat premium or Nissan firewall, A-pillar and windshield, kind of like Volkswagen's new Routan minivan, based on the Chrysler minivans.

Whatever happens, we still think it's likely Dodge will get midsize sedans, and only the convertible will carry on from the Chrysler Sebring line...

Flat Out on the Salt in the New Viper ACR

By Ed Hellwig, Lead Senior Editor Email | Blog

Insideline - We're about to make our first high-speed run in the still-black 2008 Dodge Viper ACR when the old guy pulls up to our makeshift pit. He looks exactly like the guy you'd expect to meet in the middle of the Bonneville Salt Flats, like a worn-out Hank Williams, Jr.

Over the deafening cackle of his Cummins-powered diesel pickup, he yells, "What's you boys doin'?"

"We're going to make a few runs in this Viper here."

"Yeah, how fast will she run?"

"We don't really know. Maybe 190 or so."

By the expression on his face, it's obvious ol' Hank has figured out that we have no idea what we're doin'. He knows we're just a bunch of yahoos with a fast car. He takes a good long look at the big winged Viper, then he shuts off the truck's engine so we can hear him better.

"When you're going fast, the slightest gust of wind can flip you," he says. "That's why we only ran early in the morning when the air was calm."

We look up at the mid-afternoon sun and wonder what we've gotten ourselves into.

"And make sure you don't run out of room," he continues. "You think you have all the space in the world, then Floating Mountain is suddenly right in your face. I remember when I went for 300 mph back in 1978; my chutes didn't open and I almost didn't get her stopped." He runs his fingers through a white beard. "Didn't make 300 either," he adds. "Only 280."

Great. We thought this Bonneville thing was as easy as holding our foot down until the speedometer stopped moving. Now Mr. Monday Night has us imagining our $100,000 Viper sliding across the Utah desert on its roof.

The Plan
The 2008 Dodge Viper ACR has been designed for owners who want to drive to the track, punish a few Porsches and then drive home. But taking it to a racetrack like Mazda Raceway at Laguna Seca seemed like a waste of time.

What were we going to learn? Oh wait, let us guess; it turns faster lap times than the standard Viper. Hell, with nearly slick tires, a fully adjustable suspension and a foot-high rear wing, it had freakin' better.

For those who need the numbers, we still ran it through our usual instrumented tests. It pulled a 1.1g on the skid pad and stopped from 60 mph to zero in just 100 feet. It went from zero to 60 mph in 3.7 seconds, just like the standard model, but the ACR did run a slightly faster quarter-mile time of 11.6 seconds at 124.2 mph.

But forget the usual track numbers, we wanted to stretch this Viper's legs and see if its aerodynamic add-ons really make a difference when the speed gets serious. Only one place made sense: the Bonneville Salt Flats, the world's fastest speedway. Current speed limit: 630 mph, set by Gary Gabelich in the Blue Flame.

Getting There Isn't Easy
We left Los Angeles early yesterday morning, blasting 650 miles to Wendover, Utah. It's about 120 miles west of Salt Lake City, and the salt lies just over the hills to the east.

Getting out of L.A. meant slogging through early morning traffic. As we inched along, an L.A. city cop gave us a big thumbs up, while nearly every Prius driver scowled at the jet-black coupe like it was melting the polar ice caps all by itself.

Once we were clear of the city and heading up through the blazing central Nevada desert, we couldn't help but admire those old-school racers. They often drove to Bonneville in open-top roadsters with nothing more than wet handkerchiefs around their necks. As rough as the Viper rides, it was cool inside, the seats were comfortable and the engine temperature stayed steady.

We dialed in the softest settings on the ACR's adjustable coil-over shocks, but it didn't help much. Every nick in the pavement felt like a speed bump, while real potholes delivered body blows that hurt. It could have been worse, as our car didn't have the hard-core package which strips out the radio and some of the carpeting to shave another 40 pounds off the Viper's curb weight of 3,420 pounds.

By the time we got to Wendover, the sun had set and it had cooled down to around 80 degrees. We checked into one of those motels where you can park right outside your door, as we wanted to make sure the Viper was still there in the morning.

The Salt Remains the Same
And it was, right where we parked it, so we topped off the Viper's gas tank and headed east over the hill. We exited the freeway onto a two-lane access road that heads north before bending 90 degrees directly into the salt flats. From there, it was like driving to the end of a pier, with nothing but gleaming white salt on all sides. The sign reads "Bonneville Salt Flats International Raceway."

There's not much in the way of rules, so we simply drove off the end of the pavement onto the salt. There are several tracks, but we settled in at the starting line of the international long course. Because it's over 10 miles long, we would never even come close to running out of room. Or so we thought before Hank's little pep talk.

What an incredible place. It's a perfectly clear day. Blue sky from horizon to horizon, and the glare off the salt is blinding despite our best BluBlockers. As impressive as the salt looks, mining has taken its toll over the years, so much so that an organization called Save the Salt has been established to help restore Bonneville to the way it was when racers first arrived in the early 1900s.

Trial Run
After setting up our canopy, tools and ice chest, we checked the tire pressure, torqued the lug nuts and prepared to make a trial run. That's when we spotted the pickup truck of our friend Hank cresting the curvature of the Earth. After his visit, the idea of pushing the 2008 Dodge Viper ACR to its limits on the Salt seems daunting. By comparison, going 120 mph on Highway 93 through the middle of Nevada was easy.

And our first run confirms our newfound fear. At 100 mph, the flats aren't the perfectly smooth sheet of salt we expected. The ride is a little bumpy, like driving down a freshly graded dirt road. The Viper's tires struggle for traction on the salt, and anything more than a modest nudge of the gas pedal sends them spinning. We rip a few gears and get a little sideways just for fun, but clearly, the path to higher speeds will be short shifting and gentle, deliberate pressure on the gas pedal.

Easing into 3rd gear, the Viper easily builds up to triple-digit speeds. The track across the salt feels a little smoother when the car is gliding over the top of it. Dodge says the rear spoiler on the ACR generates 1,000 pounds of downforce at 150 mph, yet the rear end still gets loose at 120 mph in 3rd gear, so we drop it into 4th.

At 150 mph, the Viper ACR shakes and rumbles. The super-quick steering that pays off so well on the track makes the car feel nervous now. Off the gas, we coast down below 100 mph and return to the starting line.

Now We're Rattled
For the next run, we go extra easy on the throttle, picking up speed gradually. The changing colors and textures of the salt enhance the sensation of speed, yet the horizon never seems to get any closer. Going fast at Bonneville feels like driving on a giant conveyor belt.

Dropping into 4th at well over 100 mph, we feed in more throttle as the ground roars beneath us. The Viper climbs past 140 mph, then 150 mph and on to 160 mph before the shift light tells us it's time for 5th gear. We shift as smoothly as possible into the next gate, but the thrust doesn't carry over to 5th. Even with our foot now flat to the floor, the pace of acceleration slows to a crawl.

Knowing that the standard Viper has a top speed of just over 200 mph, the ACR's struggle to top 165 mph makes it obvious that the big rear wing and front dive planes that are designed to plant it to the track in the turns are taking their toll on straight-line speed.

We keep our foot down for another mile or so, but the Viper doesn't go any faster.

Tweaking the Suspension for Speed
The Viper's suspension is adjustable for ride height and the dampers can be dialed for both compression and rebound, so we decide to try a few tweaks. An hour later, the Viper is sitting 2 inches lower and the dampers should offer more control.

Back on the salt, the Viper feels even more nervous than before, and in our haste to get up to speed, we dip into the throttle a little too deep. The back end suddenly jumps sideways at 120 mph. We catch it once, but it snaps again and we're thrown into a long, long sideways slide that ends without damage. Most important rule at Bonneville: Always go easy on the gas.

We decide to back off the shocks a little to smooth out the ride, but keep the lower ride height to improve the aerodynamics. By now, the 2008 Dodge Viper ACR is packed with so much salt that it's probably carrying an extra 20 pounds.

Track Knowledge Helps
It's only been a few runs, but we're already feeling more comfortable at speed now that we've found a smooth groove. It pays to have a little track knowledge, even at Bonneville. Louise Ann Noeth's Land Speed Racing notes that the legendary Mickey Thompson used to walk the entire length of the track the night before a run so he could see the subtle surface changes in the moonlight. Then again, he was also trying to top 400 mph in his 2,000-horsepower streamliner.

Back up to speed, we're through 4th gear and into 5th and topping 160 mph again with the Viper still slowly building speed. It always feels like we're going to run out of racing room, but by keeping on eye on the orange cones that dot the track, we're reminded that there are still miles of salt left.

Foot still flat on the floor, we creep past 170 mph. The Viper is still twitching and hopping, but we figure all that downforce will keep it from going anywhere. The speedometer needle edges past 171, then 172 and finally 173 mph before it's clear that even a 600-hp V10 is no match for the air resistance at these speeds.

We're happy to run another mile or so as we soak up the experience of pushing to the Viper to its limit on the salt, like so many American hot rods before it — but that's all this Dodge has today.

The 200-mph club is going to have to wait.

The Long Ride Home
When the day is done, our first stop is again the gas station. At 170 mph, the Viper swills gas faster than the Chinese middle class, and it has burned through an entire tank of fuel during our half day of high-speed runs.

Our second stop is a car wash in downtown Wendover, as the Viper ACR needs a good spray-down to get all that salt off its once-pristine black paint. More than an hour later, we think we've done a pretty thorough job.

The next morning, the Viper feels like its going to shake itself to pieces at anything over 80 mph. At first, we think the Viper is just plain screwed up, like the salt has already eaten away all of it suspension bushings, or all four of its massive Michelins have somehow been flat-spotted. But a quick inspection at a roadside gas station reveals a stubborn layer of salt caked to the inside of the Viper's ultralight wheels, obviously throwing off their balance. A shot of water from a hose solves the problem; the Viper rides smooth again right up to 150 mph.

Ten hours and 72 gallons of premium later, we're back in L.A. traffic, proving positively that the 2008 Dodge Viper ACR really can be driven to the racetrack, punished and driven home. Even if your chosen racetrack is Bonneville, the world's fastest speedway.

The manufacturer provided Edmunds this vehicle for the purposes of evaluation.

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2008 Dodge Viper ACR Video (Photo by Kurt Niebuhr)

Photos

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It's only 650 miles from Los Angeles to Bonneville, so a road trip was clearly in order to see what the Viper could do. (Photo by Kurt Niebuhr)

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Other than this sign, there's not much in Death Valley Junction, a virtual ghost town deep in the Mojave Desert. (Photo by Kurt Niebuhr)

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This old dirt track sits just outside the Tonopah, Nevada, home of the U.S. Air Force's Tonopah Test Range. (Photo by Kurt Niebuhr)

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Heading up through central Nevada, there's plenty of room to let the Viper stretch its legs. (Photo by Kurt Niebuhr)

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This gas station is all there is once you get off at the Speedway exit just east of Wendover. From here, just go about four miles down the access road and you'll be deep in the heart of Bonneville. (Photo by Kurt Niebuhr)

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It's early in the day and the Viper is still clean as it waits to make a few runs on the international long course. There are markings like this all over the salt, but it takes a map and a little bit of local knowledge to find them. (Photo by Kurt Niebuhr)

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The salt may look smooth, but it's actually quite bumpy when you're going fast. (Photo by Kurt Niebuhr)

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The Viper's rear tires may have been a pair of 345/30ZR19 Michelin Pilot Sport Cups, but they were no match for the salt; they struggled for traction throughout the day. (Photo by Kurt Niebuhr)

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You don't have to pull the wheels to adjust the damper settings, but if you want to crank down the springs, it's easier to do with everything out of the way. (Photo by Kurt Niebuhr)

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Fully adjustable coil-over shocks allow us to adjust the ride height as well as the rebound and compression settings of the dampers. (Photo by Kurt Niebuhr)

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A quick check to make sure everything looks OK under the hood, and we'll be off for another run. (Photo by Kurt Niebuhr)

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It looks like this for at least 10 miles; perfect for topping out a Viper or just about anything. (Photo by Kurt Niebuhr)

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At these speeds, the Viper's 600-hp V10 is no match for force of the wind. (Photo by Kurt Niebuhr)

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Rocker/sill exhausts are one of the Viper's most unique features; don't expect to see another production car with them anytime soon. (Photo by Kurt Niebuhr)

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The Viper ACR rides on a fully adjustable suspension and weighs 40 pounds less than a standard Viper. There's also an optional Hard Core Package that strips out the radio and some of the carpeting to shave another 40 pounds off the curb weight of 3,420 pounds. (Photo by Kurt Niebuhr)

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According to Dodge, the rear spoiler on the Viper ACR produces 1,000 pounds of downforce at 150 mph. (Photo by Kurt Niebuhr)

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Once you get off the well-worn tracks, the surface of the salt is not always smooth. (Photo by Kurt Niebuhr)

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The terrain gives Bonneville an eerie, otherworldly feel that's hard to forget. (Photo by Kurt Niebuhr)

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There are no engine upgrades for the ACR, so its V10 makes the same 600 horsepower and 580 pound-feet as a standard Viper. (Photo by Kurt Niebuhr)

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Everything else about the ACR is typical Viper: a low, slouched seating position, slightly offset pedals that are a little too close together and a set of perfectly aligned white-faced gauges. (Photo by Kurt Niebuhr)

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This is the end of the access road that leads to the Bonneville Salt Flats. From here, we simply drove off the edge and onto one of the most famous racetracks in the world. (Photo by Kurt Niebuhr)

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If you don't want your car to rot to the ground within the week, a good high-pressure wash is necessary after running on the salt. (Photo by Kurt Niebuhr)

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A little water from a gas station hose was all it took to rid the Viper's wheels of the salt that was throwing their balance out of whack. It was a smooth ride home from then on out, relatively speaking. (Photo by Kurt Niebuhr)

Car Makers Looking to Electrify with Lithium-ion

By: James Kingsdalec

DETROIT (Reuters) - Chrysler LLC is planning to launch all-electric vehicles in the next three to five years, the latest automaker to join the race to produce cars with fuel-saving technologies.

Chrysler’s new Envi unit, which was created last September, is developing vehicles that are intended to run on battery power alone for about 40 miles, Chrysler spokesman Nick Cappa said on Monday.

“The group is looking to have a product available in the marketplace in the next three to five years,” Cappa said.

Chrysler, which has lagged rivals in its hybrid strategy, is working on a new generation of hybrid vehicles with lithium-ion batteries that are lighter and store more energy than the nickel-metal hydride batteries now in wide use.

Chrysler has not yet announced any partnership for the project or for the development of the batteries.

General Motors Corp and Toyota Motor Corp are racing to develop rechargeable hybrid vehicles using lithium-ion batteries.

GM’s all-electric Chevy Volt is scheduled to go into production in 2010 while Toyota has said it will be testing a rechargeable version of its Prius hybrid with fleet customers around the same time.

Ford, which is building 20 plug-in hybrid SUVs on a demonstration basis, has said it expects to have a mass-market car in five to ten years.

Lithium ion batteries are widely used in consumer electronics but automakers have faced a range of issues, including cost and the risk of overheating, in adapting them for use in powering cars.

Chrysler, bought by private equity group Cerberus Capital Management last August, showed three “green” concept cars in January during the Detroit auto show that featured electric motors intended to be powered by lithium-ion batteries — Chrysler’s ecoVoyager, Dodge ZEO and Jeep Renegade.

“Chrysler will produce technology similar to one of them or a combination of the three,” Cappa said.

Chrysler’s move comes as it is reeling financially from sinking sales of large SUVs and pickup trucks as domestic gasoline prices top $4 a gallon.

The Auburn Hills, Michigan-based automaker relies on sales of trucks and SUVs, such as the Dodge Durango SUV and RAM pickup truck, for almost 70 percent of its total sales at a time when U.S. consumers are increasingly demanding lighter and more fuel-efficient vehicles.

The rising popularity of gas-sipping hybrids is prompting automakers to invest in the development of hybrids and electric vehicles.

Toyota dominates the U.S. market for hybrid sales on the strength of the success of its Prius and expects to be selling over 1 million hybrid vehicles annually by early next decade.

Chrysler Customers Swamp Dealerships As Leasing Nears End

DETROIT -(Dow Jones)- Chrysler LLC's decision to suspend leasing is unintentionally serving as the best end-of-month sales incentive the auto maker could have implemented to help clear dealer lots of inventory.

Chrysler dealers say showroom traffic and sales have soared in recent days, with nearly 100% of transactions done with leases. Dealerships are flooding local newspapers with advertisements and some are staying open until midnight as they try and squeeze in as many lease deals as possible. They are also pondering what business will be like come Friday without one of the key tools in their financing toolkit.

Chrysler announced last Friday it would no longer offer leases as of Aug. 1, a dramatic move made necessary by the steep declines in residual values of pickup trucks and sport-utility vehicles in recent months as fuel prices soared and consumer confidence waned. Ford Motor Co. (F) and General Motors Corp. (GM), which have also suffered big losses from leases, are taking steps to tighten their leasing practices, though they will continue to offer leases.

Chrysler dealerships in the Michigan and New York markets, where leasing typically generates 50% to 75% of dealers' sales volumes, are the biggest beneficiaries of the late-month surge.

Golling Chrysler Jeep Dodge Inc., located in Bloomfield Hills, Mich., more than tripled its business, selling 112 vehicles on Monday and 96 on Tuesday, said owner Bill Golling. The majority of sales were through leasing.

"We would like to retain the lease program, but the economic realities means it's just not possible," said Golling, who is keeping his dealership open to midnight and serving hot dogs and hamburgers to customers.

"Leasing was a great advantage when you could get more car for less money at a better term, but that doesn't exist anymore," he said, adding that he hopes Chrysler will respond with some strong and new incentives on Friday. Chrysler has said that it plans to plow more financial resources into its sales incentives.

Could Bring Sales Forward

The end-of-month surge in sales at Chrysler could help spruce up the company's July sales numbers, which are predicted to show another double-digit decline when the figures are released Friday. Through the first six months of 2008, Chrysler's U.S. sales were down 22%, the biggest drop of any major manufacturer, as the company relies more than its peers on sales of trucks and SUVs.

The jump in sales also likely indicates that many buyers are buying sooner than they otherwise would have, indicating that sales in coming months could suffer as a result. For auto dealers struggling with bloated inventories of trucks and SUVs, however, their first priority is moving the 2008 models off the lot before new models hit the showroom floor and before the current batch lose even more value.

"I have got to get rid of this inventory and move out the 2008s and then we can figure out something for August sales," said Paul Steel, who runs three dealerships in Michigan, including Southfield Chrysler Jeep.

Steel said he has to sell about 500 vehicles alone at the Southfield location before so he can start accepting Chrysler's 2009 models.

"It has been a frenzy," Steel said. "Everyone is trying to get in now on a three-year lease hoping that Chrysler Financial will get back in the game by the time their lease is done."

Steel has kept his dealerships open until midnight every night since Monday, and he expects his staff will be working until at least 2 a.m. Friday morning to process all the orders.

"We are seeing many people either keep the same vehicle they have or go up a vehicle," Steel said.

Tough Time To Lose Leasing

For dealers and auto makers, the scaling back or elimination of leasing makes their job tougher at a time when U.S. auto sales are already at their lowest levels in 15 years. Adding to the problem is that foreign auto makers such as Toyota Motor Corp. (TM) and Honda Motor Co. (HMC) aren't in the position of having to eliminate leases, as residual values on their car-heavy portfolios have held steady or risen in some cases.

Auto makers will attempt to compensate for the lack of leasing as an option by ramping up incentives, including longer-term loans at lower rates. That's a move that comes with risks, as it cuts into profit margins and creates expectations among consumers that bargain-basement deals will always be available. Auto makers and dealers have in recent years tried to reduce their reliance on incentives, but the steep decline in sales has backed them into a corner.

For years, leases have made it possible for consumers to drive newer, more- expensive cars than their budgets might otherwise allow. In a lease deal, the vehicle is owned by a bank or a finance unit like Chrysler Financial, and the customer merely rents it, usually for two or three years. Auto makers benefit from leases because they facilitate the sale of higher-priced vehicles, which generate more profit.

But leases are becoming a liability amid tanking resale values, especially of used pickups and SUVs. In most cases, when a lease is up, the customer returns the vehicle to the auto maker, which then resells the car or truck. The problem for auto makers lately is that the values at which they are able to sell those off-lease vehicles are far lower than they had assumed they would be when lease contracts were written.

Ford Motor Credit announced last week that it took a $2.1 billion write-down in the second quarter associated with its leasing business. GM affiliate GMAC Financial Services said Thursday it wrote down $716 million related to leases, a figure that would have been more than three times higher if it weren't for various arrangements with GM. Both Ford and GMAC are taking steps to make leases more expensive, pushing consumers to enter into loan agreements to purchase instead.

Chrysler, which is owned by investment firm Cerberus Capital Management, hasn't disclosed how much it has lost as a result of leases gone bad.

Moire talks with both Fiat and Tata

NEW YORK: Automobile major Chrysler LLC is looking for ways to cut costs and also line up partnerships with foreign auto makers including India's Tata Motors to shore up its finances, a media report today said. The Wall Street Journal quoting people familiar with the matter said, "Chrysler LLC is scrambling to slash costs and line up partnerships with foreign auto makers to shore up its finances amid a painful downturn in sales and a deteriorating outlook for the company." Chrysler had discussions with Tata Motors about having the company sell and possibly assemble jeeps in India, the report added. "Separately, Chrysler has had talks about leasing one of its US plants to produce cars for Italy's Fiat SpA, they said. "Chrysler has been exploring alliances since it was acquired a year ago by Cerberus Capital Management LP, and has mapped out a deal to make trucks for Nissan Motor. Both sets of talks are preliminary and may not lead to deals," the newspaper noted. With the deep downturn in the US vehicle sales of Chrysler, Cerberus has "become more concerned about Chrysler's ability to turn around on its own and has stepped up efforts to reach out to foreign car companies," the report said. Further, quoting people familiar with the matter, the publication said that the talks with Tata and Fiat are taking place in parallel discussions with other auto companies. Chrysler's US vehicle sales fell 22 per cent in the first half of the year and has worsened in recent months. In other cost-cutting efforts, Chrysler is getting ready to offer early retirement packages for salaried employees and the offers are also part of an effort to trim its white-collar work force by 1,000, the report added.

6.4-Liter Hemi-Powered SR 392 Roadster SEMA Special To Hit Auction Block At Monterrey [Monterrey]

The SR 392 roadster, built by Quality Metalcraft's Michael Chetcuti and Chrysler's Mark Allen and Ralph Gilles, will be auctioned off in August at the the Russo & Steele car auction during the Monterrey Historics. In case you've forgotten, the SR 392 concept made its debut in the Chrysler display at last year's SEMA show and it's named after the 392 6.4-liter Hemi crate engine under the hood. Since then, it's traveled the country, winning show awards left and right. We only hope it finds an owner who treats this Hemi-powered hot rod right. Full press release after the jump.

galleryPost('SR392SEMA', 8, 'Hemi-Powered Hellion Of A Hot Rod');

Private Seller to Auction One-Off Chrysler Concept Roadster at Russo & Steele

A sleek black and chrome Detroit-style roadster, designed by Chrysler's Mark Allen and featuring a 6.4 L Hemi crate engine, will be auctioned at the Russo & Steele car auction in Monterrey, California this August 14-16, 2008. The SR 392 Roadster has won several prestigious awards at Hot Rod shows throughout the country this year.

Detroit, MI (PRWEB) July 30, 2008 — An edgy, HEMI-powered, award-winning roadster from Chrysler's 2007 Mopar SEMA exhibit will be up for bidding at the August 14-16 Russo and Steele Auction in Monterey, California.

The SR 392 Roadster, featured widely in 2008 issues of both Hot Rod and Street Rodder magazines, has won numerous prestigious awards. Most recently it was hand-selected by the widow of the late Boyd Coddington for a Boyd Coddington's Pro's Pick Award at the Good Guys Nationals in Columbus, Ohio.

It also won a Chip Foose Design Excellence Award at the 2008 Grand National Roadster Show. "This hot rod is truly trend-setting. It's design elements will be mirrored in hot rods and show vehicles for years to come," Foose said.

For nearly two years, Chrysler's Mark Allen and Ralph Gilles planned to build the SR 392 Roadster as a SEMA stunner with Michael Chetcuti of Livonia, Mich.-based auto supplier, Quality Metalcraft (QMC). Allen is chief designer, Jeep/Dodge Truck Studios - Chrysler LLC and Gilles is Vice President of Jeep/Truck & CFM Design - Chrysler LLC. Gilles and Allen are members of Chrysler's Mopar Underground SEMA design team, a group of in-house automotive enthusiasts who donate their time to SEMA project vehicles.

Allen, Chetcuti and Gilles saw a challenge in proving that the 6.4-liter HEMI crate engine could apply to a vehicle other than traditional muscle cars or modified upfits. The team's idea was to redefine the classic hot rod with a more functional urban and industrial attitude to create a distinctly Detroit roadster.

Allen said, ''It was important to convey the car's theme as an homage to Detroit - the cool Detroit with its unique artistic community, music and gritty vibe. We used durable materials and let the mechanicals show to reflect the industrial backbone of the city. We wrapped it all up in a high-gloss black-and-chrome wrapper to evoke Detroit's cool attitude.''

''The core design elements of this roadster speak to the grit and industrial edge of our city,'' said Chetcuti. ''Things like the mezzanine flooring detail and Eames-inspired seating - these take an industrial cue but are by no means 'rat-rod.' It is a refined and organized design throughout.''

Awards for the SR 392:

* Mothers Choice Award - Excellence in Automotive Design (SEMA, 2007)
* Hot Wheels Designer's Choice Award (SEMA, 2007)
* Chip Foose Design Excellence Award (Grand National Roadster Show, 2008)
* AMBR Outstanding Class Award (Grand National Roadster Show, 2008)
* America's Most Beautiful Roadster (Grand National Roadster Show, 2008)
* Altered T-Roadster Award - 1st Place (Detroit Autorama, 2008)
* Street Rodder Magazine: Driven Award (Detroit Autorama, 2008)
* International Show Car Association: Outstanding Engineered Award
(Detroit Autorama, 2008)
* Boyd Coddington's Pro's Pick Award (Good Guys Nationals, Columbus, OH, 2008)

Media Coverage:

* Detroit Auto Scene - December 31, 2007 & January 7, 2008
* Mopar Collector's Guide - February, 2008
* Hot Rod - April, 2008
* Street Rodder - May, 2008
* Street Rodder - June, 2008

Shows:

* SEMA Show - Las Vegas, NV - October, 2007
* Grand National Roadster Show - Sacramento, CA - January, 2008
* Autorama - Detroit, MI - March, 2008
* LA Roadster Show - Pomona, CA - June, 2008

Chrysler health care changing

BY SUSAN TOMPOR • FREE PRESS COLUMNIST

Chrysler's UAW retirees and surviving spouses need to pay close attention to some paperwork that could be sitting on the kitchen counter.The papers apply to your health care coverage.

If seniors miss the July 31 deadline, you could be socked with extra fees that add up to 20% or 45% more each month for coverage.

Direct billing

Thousands of UAW-Chrysler retirees and surviving spouses soon will be required to pay $11 a month for single coverage and $22 a month for family coverage.

You would need to authorize deductions from your pension check by July 31.

It also is very important to sign and date the back of the form.

Yet if UAW-Chrysler retirees do not respond, they'll automatically be enrolled in what's called the "direct billing payment option."

How much will that cost?

Direct billing -- the second box listed on the form -- has a $5 monthly service fee.

So instead of paying $11 a month, you'd pay $16 a month. Or instead of $22 a month, you're looking at $27 a month.

$5 service fee for a bill

I realize $5 extra per month doesn't sound like much, yet I can't imagine anyone wanting to pay a service fee to get a monthly bill.

And $5 a month does add up to an extra $60 a year -- enough to cover nearly six months of coverage for a single retiree.

If you do end up getting stuck with the monthly fee, though, the letter states that it's possible to later authorize deductions from the pension check by providing 45 days' notice to Benefits Express.

The form also includes a box for opting out of the UAW Amended Plan to enroll in a catastrophic plan only. There are no monthly premiums, but the catastrophic plan has higher deductibles, out-of-pocket maximums and co-payments.

And someone can elect to waive Chrysler-provided health coverage.

A group of UAW protected retirees will not have new cost-sharing requirements. They are entitled to an annual pension benefit of $8,000 or less -- excluding lump-sum payments and others -- and their pension benefit rate is calculated on a specific formula per year of service.

David Elshoff, a spokesman for Chrysler in Auburn Hills, said the company is doing what it can, including using phone blasts or recorded messages, to remind retirees and surviving spouses to take some action to avoid extra fees.

Retirees also can learn more at www.chryslerretirees.com.

Or if Chrysler retirees lost their pension election form, they can call Benefits Express: 888-409-3300.

No such July 31 deadline applies to UAW-GM or UAW-Ford retirees.

What's difficult for many retirees, of course, is that it can become overwhelming to read all the new rules.

The UAW-Chrysler health care coverage letter gets bogged down by discussing legal notices and the like.

That's because health care coverage would be amended as part of a still pending settlement.

Chrysler LLC said a judge will decide in August whether to grant approval for the automaker to establish a $9.75-billion retiree health care trust fund negotiated with the UAW last year.

Chrysler to trim 1,000 salaried jobs worldwide

This is 3rd round of cuts in 18 months

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER

For the third time in the past 18 months, Chrysler has announced plans to cut its salaried workforce.

Workers were told Wednesday that another 1,000 white-collar jobs worldwide would be eliminated by Sept. 30, following a first half of the year in which Chrysler saw its U.S. sales drop 22%.

The job cuts come on top of more than 27,000 job reductions already announced since February 2007, when the automaker began trying to correct its downward spiral.

Since then, Chrysler has been acquired by a new majority owner, Cerberus Capital Management, and the U.S. auto market has tumbled, sending shock waves throughout the domestic auto industry.

"The signs of economic challenge continue for the U.S. market and as a result, further actions must be taken to improve our business and return to profitability," Nancy Rae, Chrysler executive vice president for human resources and communications, told workers by e-mail.

"In response to the continued deterioration in the U.S. automotive market," she added, "an incremental reduction in both salaried head count and supplemental resources is, unfortunately, necessary."

A Chrysler spokesman confirmed the cuts.

"Chrysler LLC has a clear, long-term strategy to build a profitable enterprise, even in this challenging economy," Rae wrote. "Despite these challenges, the company's liquidity position through the first half of the year remained unchanged versus December 2007 as a result of aggressive programs to reduce working capital, the sale of noncore assets and volume-related manufacturing reductions."

Late last month, Chrysler announced it was shutting down its St. Louis-area minivan plant and reducing a shift at its pickup plant there.

On June 30, Chrysler had 18,500 salaried workers worldwide with 9,500 in the Detroit area, said David Elshoff, a Chrysler spokesman. He couldn't say how Wednesday's announcement would be felt locally.

The Auburn Hills automaker hopes the bulk of cuts will come through voluntary buyouts, early retirements or attrition but cautioned that involuntary layoffs could be considered if goals aren't met.

"The provisions of the special retirement programs, which will be effective Aug. 31, 2008, are consistent with programs announced" in February 2007, Rae wrote.

David Cole, chairman of the Center for Automotive Research, was not surprised by the move, noting the automaker's efforts to partner with other automakers to bring small cars to market.

"The cost of having an overly large organization just doesn't do it anymore," Cole said.

Chrysler loses $431 million

Automaker gives results after Daimler data

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER

Chrysler LLC released financial figures Thursday that indicate the automaker lost $431 million in the first three months of this year.

The Auburn Hills automaker's decision to officially release limited financial figures is a first since going private last August and comes in the form of a clarification to financial statements issued early Thursday by minority owner Daimler AG.

"Chrysler LLC has a clear strategy to build a profitable enterprise for the long term as an independent company, even in this challenging economy. Our full-year plan for the market in 2008 has been aggressively conservative, allowing us to be better positioned for the current slowdown," said Shawn Morgan, a Chrysler spokeswoman. "Despite the challenges, Chrysler continues to meet or exceed its plan on all financial metrics."

Daimler, which has maintained a 19.9% stake in Chrysler Holding LLC, the umbrella organization that includes the automotive business and Chrysler Financial, announced it lost 373 million euros, worth $585 million at today's exchange rate, on its share of Chrysler, primarily during the first quarter of 2008.

That would imply that Chrysler Holding lost $2.9 billion under European accounting standards as used by Daimler. (Daimler reports most of Chrysler's financial results on a three-month delay.)

Chrysler executives have argued strongly against using Daimler's numbers to judge the Auburn Hills automaker's finances, saying the differences between U.S. and European accounting standards are too different for a fair comparison. In the past, however, Chrysler as a private company never officially released its own numbers. As a privately held company, it is not required by the Securities and Exchange Commission to report audited financial results.

Thursday marked a change.

According to a Chrysler statement: Daimler's stake in Chrysler Holding experienced a net loss of 65 million euros -- $102 million -- under a U.S. accounting standards. Of that, Chrysler said 55 million euros -- $86 million -- came from its automotive business.

This would imply Chrysler Holding as a whole lost $509 million, of which Chrysler LLC lost $431 million.

Chrysler attributed the differences between Daimler's stated loss of 373 million euros and Chrysler Holding's accounting loss of 65 million accordingly:

• A 130-million euro adjustment for differences between accounting

Fitch cuts rating on credit for Chrysler

Public concern expected to further harm firm's standing

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER

Suppliers and retail customers concerned about Chrysler LLC's financial condition could exacerbate the struggling automaker's situation, Fitch Ratings cautioned Tuesday as it further downgraded its credit rating on the Auburn Hills automaker.

Fitch reiterated that Tuesday, adding: "This could be accelerated in the event that suppliers or retail customers become concerned with Chrysler's financial condition and restrict trade credit or reduce retail purchases."

The rating agency downgraded Chrysler to CCC from B-minus. Fitch has only two rating levels below CCC for high-yield corporate borrowers.

"The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes," a Fitch note said. "Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives."

Last week Chrysler announced it was getting out of offering leases on new vehicles through its financial arm, Chrysler Financial. The automaker said falling resale values of vehicles coming off lease were to blame.

Chrysler has said it will redirect its resources into financing deals to help customers purchase new vehicles.

But Fitch said it expects the change to result in a sales decline for Chrysler.

"Given the challenges in the bank, auto and capital markets, it is unlikely that third-party financing will step in to fully replace lost volumes," Fitch said. "Higher sales incentives are also unlikely to close this gap, resulting in lower production volumes at Chrysler."

Chrysler executives have maintained that the privately controlled automaker is meeting its financial targets and has issued statements that it is not considering bankruptcy.

Chrysler sales have dropped 22% so far this year, more than twice the rate of the industry as a whole.

Last week Chrysler indicated that it lost $431 million in the first three months of this year on its automotive business.

The automaker has said it ended 2007 with $9 billion of cash on hand.

The company also has tapped into a $2-billion loan allowed under the original deal with Daimler AG that gave Cerberus Capital Management majority control of Chrysler last August.

Chrysler to stop assisting salaried workers with tuition

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER •

Chrysler LLC is suspending its tuition-assistance program that has helped salaried workers pay for higher education, the Free Press has learned.

"Considering current economic conditions, and consistent with our continuous actions to improve our business and return to profitability, we have had to make the difficult decision to indefinitely suspend the tuition-assistance programs for all salary" non-bargaining-unit employees, a message to white-collar workers said.

Max Gates, a Chrysler spokesman, confirmed the announcement was made late Tuesday.

Workers already in classes or already approved for classes will get their reimbursements, Gates said.

But workers who are midway through a degree program will have to figure out another way to pay if they want to complete the program.

"There will be no new course work approved," Gates said.

Gates said the company hopes the program will be reinstated, but "if and when, of course, is still to be determined."

Chrysler isn't the first company to cut its tuition program. Ford Motor Co. has done the same.

Chrysler declined to say how many of the 14,400 eligible employees took advantage of the program or how many people would be affected. The company also declined to say how much the perk was worth.

Chrysler is struggling to fix its business amid dramatic U.S. sales drops.

So far this year, the Auburn Hills automaker's U.S. sales are down 22% -- more than twice the industry rate -- and Chrysler has indicated that its auto business lost $431 million during the first 3 months of this year. Chrysler executives insist the company is meeting its financial goals and has plenty of cash to operate, fighting off rumors of possible bankruptcy.

Since February 2007, the automaker has announced the elimination of more than 28,000 jobs and plans to close two assembly plants.

Last week, Chrysler announced it would stop offering new leases to customers through its financial arm as the resale value of SUVs and trucks plummets, making such transactions riskier.

Chrysler plans to exit leasing business on Aug. 1

Bradford Wernle
Automotive News

Chrysler Financial, the finance arm of Chrysler Holding LLC, will get out of the leasing business, the company said on Friday, July 25.

"We are shifting our strategy to focus on retail products," said spokesman Bill Porter. "Effective Aug. 1 we will no longer offer lease products in the United States."

Porter said the move by the unit of the No. 3 U.S. automaker, which is controlled by private equity firm Cerberus Capital Management, was prompted by the tough market conditions.

U.S. auto sales have dropped to their lowest level in 15 years, and the sudden premium on fuel-efficiency in the face of record gasoline prices has forced consumers to abandon SUVs and other light trucks.

The result has been a sharp decline in the resale prices for light trucks that has forced major automakers and related lenders to take large losses to write down the value of leases on those once-popular vehicles.

"You have got the dropping of the used car vehicle prices. You have got people that are struggling with the credit crunch," Porter said. "It is very difficult right now to offer competitive lease products. So we are switching our strategy."

The move comes a day after Ford Motor Co. took a $2.1 billion charge because of a drop in residual values of its leased vehicles.

And earlier today, Honda Motor Co. said it expects falling residual values of big used vehicles in the United States to shave another 25 billion yen ($231.8 million) from its operating profit in the year to March 2009.

Earl Hesterberg, chairman of Group 1 Automotive Inc., the nation's fourth-largest dealership group, reacted to the Chrysler news by saying:

"Their credit arm has been a competitive weakness before this action. I really don't see how they can be competitive at all in the marketplace with this kind of action. I have no idea how they can be competitive without any leasing at all."

Group 1 owns eight Chrysler LLC dealerships.

Sid DeBoer, chairman of the Lithia Motors Inc. dealer chain, said the Chrysler move is positive for his company, which owns 38 Chrysler dealerships.

DeBoer said he believes he will now have more retail financing options to offer customers. DeBoer said his dealerships only do about 100 leases a month combined.

"We're going to see more zero-for-72 and a lot of other tools. That helps Lithia sell more cars. If they put zero-for-72 on more products and more cash on the hood, we're going to do better. We've never been big on leasing. Most of our customers are from lunch bucket America."

Reuters contributed to this report