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Chrysler may have a modest small-car edge on its Big 3 rivals

Aside from the lineup of trucks and SUVs, the automaker has been developing a line of fuel-efficient vehicles.

October 29, 2006|John O'Dell | Times Staff Writer

Are American motorists ready for the Dodge Lamb?

The maker of the rugged Ram pickup and other big wheels isn't rolling out that nameplate just yet. But parent Chrysler Group is sending a new fleet of smaller cars and trucks into the marketplace -- and not a moment too soon, given the sudden flow of red ink as it struggles to sell its full-size models to customers seeking mileage over muscle.

The U.S. arm of Stuttgart, Germany-based DaimlerChrysler depends more heavily on sport utility vehicles and pickups than many of its principal rivals. Trucks, excluding minivans, accounted for 64% of Chrysler Group's sales last year. Toyota Motor Corp., which this year has supplanted Chrysler in the No. 3 spot in the U.S. market, relies on pickups and SUVs for just 37% of its sales.

Chrysler Group's reliance on heavy metal was underscored last week when the company posted a $1.5-billion loss for the third quarter, the result of slumping sales, backed-up vehicle inventories and heavy discounting aimed at trying to move some of that stock off dealer lots. Ram sales through September were down 14% from a year earlier, and the Dodge Durango SUV had fallen 41%.

"They lost big because they tried to force the market" by continuing to build trucks, Burnham Securities analyst David Healy said.

Even though fuel prices have come down from the year's record highs, Chief Executive Tom LaSorda has acknowledged that his company faces steep challenges. Chrysler Group is cutting production of large trucks this quarter and is working under the assumption that prices at the pump will remain high -- not just $3 a gallon but even $4 down the line, LaSorda has said.

Going smaller might seem a tough chore for a company that has built its reputation on Dodge trucks, rock-crawling Jeep SUVs and the powerful flagship Chrysler 300 sedan.

Torrance attorney Mark Allen, 44, said the new Dodge Caliber compact was one of the cars at the top of his list when he started looking to replace his Mazda Miata roadster.

He's no stranger to Chrysler products; his wife drives a Jeep Liberty. But when he stopped by his local Dodge dealership, he said, he was disappointed in the Caliber's mileage.

"A small car ought to do better," he said, comparing its 32 miles per gallon on the highway with the 38-mpg rating of Honda Motor Co.'s Fit.

Still, Chrysler Group might not have to work too hard to persuade customers to think of its brands when they go looking for smaller vehicles, said Jeremy Anwyl, president of in Santa Monica.

Analysts at the online auto information provider see Chrysler's cars getting quite a few hits these days as users surf the site for fuel-efficient vehicles, he said.

Many of them know Chrysler from its previous small cars.

Marilyn Coffman, a 58-year-old technical writer from Pasadena, said she had "heard good things about Chrysler from friends" when she went shopping for her first small car in October 2003. She ended up with a PT Cruiser, rated at 27 mpg on the highway. Coffman has had such a good experience, she said, that she has been eyeing a new convertible version of the model.

That Chrysler is turning to even smaller vehicles than the Cruiser doesn't bother Altadena resident John Haines. The 57-year-old actor has been a Chrysler fan since high school and has owned a dozen, including his present vehicles: a 1998 Chrysler Sebring convertible and a 2004 Chrysler 300M.

Haines doesn't care for some of the company's new larger cars, he said, citing the Dodge Magnum sport wagon, but he finds the new small cars "very appealing."

"They're just the right size," he said, "and they look different but adorable."

Chrysler needs "to move away from trucks," he said, "and this will help. And it would be terrific if they'd come out with a hybrid. They're weak in cars that can use alternative fuels."

Chrysler Group has seen its small-car sales grow modestly this year. Car models represented 23.6% of Chrysler's total sales, up 1.6 points from a year earlier. The share is expected to keep increasing as the Caliber is joined in the market by other models.

Some analysts believe that Chrysler may be in better shape than General Motors Corp. and Ford Motor Co. to capitalize on the thirst for smaller, more fuel-efficient cars and crossover utility vehicles. Crossovers are SUV-styled sporty wagons built on car-like platforms for reduced weight and better mileage. To many buyers, they combine some of the best attributes of trucks and cars.

With several new small and mid-size vehicles due by the end of the year, "the advantage goes to Chrysler in the short run," said George Magliano, a New York-based auto industry analyst at Global Insight Inc.

Chrysler Group was already selling the PT Cruiser and Dodge Neon small cars when fuel prices started ratcheting up, and it had other models on the drawing boards.

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