Chrysler We’ll Meet New Mileage Rules

With Washington lawmakers moving forward on proposals to increase federal fuel economy requirements, at least one of Detroit's Big Three is ready to meet the likely new measures, even if it means significant new investments and a shift in its product lineup.

Among the technologies Nardelli believes will help is Chrysler's new two-mode hybrid system. Developed as part of a joint venture with General Motors, BMW, and Chrysler's former German owner, Daimler AG, it is an alternative approach to the hybrid-electric powertrain technology used by Toyota. Set to appear in several Chrysler models, including the Aspen SUV next year, the two-mode technology is designed to boost fuel economy on the highway, as well as during around-town driving.

On GM's Chevrolet Tahoe, for example, it increases the city-cycle mileage rating by about 50 percent, to 20 mpg. Chrysler has not released final fuel economy ratings for its two-mode products, but the system will likely prove even more critical once Senate and House lawmakers agree on a final fuel economy increase.

Chrysler is particularly vulnerable to the proposed CAFE hike because nearly two-thirds of its lineup consists of the low-mileage minivans, pickups, and SUVs that have propped up its balance sheet over the last several decades.Considering the worsening financial situation at Chrysler - analysts expect it to post 2007 losses of around $1.8 billion, though as a privately held company, it's unclear how much financial data the maker will now provide - new mileage standards and shifting market conditions will be a heavy burden.

On the other hand, Chrysler was recently given a helping hand by its union workers. As it did for General Motors Corp. and Ford Motor Co., the UAW approved a variety of cost reductions, including a two-tier wage structure and a program that takes much of Chrysler's hefty healthcare costs off its books.But by various industry estimates, the savings will ultimately add up to $1000 or more per vehicle, and will close about two-thirds or more of the labor gap between the Big Three and the foreign-owned "transplant" assembly lines.

© Source: thecarconnection
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