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Chrysler Pins Hopes on New Pickup Truck Even as Gas Prices, Economy Drive Buyers Away

CHELSEA, MI - June 26, 2008: Tom Krisher writing for the AP reported that gas prices are above $4 per gallon. Full-size pickup truck sales are down more than 21 percent through May. The U.S. auto market is in a downward funk. Great time to introduce a new pickup truck, right?

Strange as it may seem, the article states, that's what Chrysler LLC executives are thinking when it comes to the new 2009 Dodge Ram, due in showrooms by September or October.

"We're actually pretty optimistic about it," said Deborah Wahl Meyer, Chrysler's marketing chief, who adds that despite a downturn, pickups remain the largest segment of the market. "There's a large group of core people who need trucks."

In an interview Thursday at Chrysler's annual new model media event at the company's proving grounds near Chelsea west of Detroit, Wahl Meyer agreed with General Motors Corp. and Ford Motor Co. executives that the U.S. auto market has made a structural shift away from pickups and sport utility vehicles.

But she says the pickup market will still be sizable, and the company has made changes in the Ram to make it better than its main rivals, the Ford F-150, Chevrolet Silverado and GMC Sierra.

They include a new high-quality interior with more storage space that gets rid of the shiny plastic of the old truck, a more powerful engine, and a new suspension. The new truck also has better aerodynamics and an 80-pound weight reduction that allow it to get one extra mile per gallon of gasoline than the current model. Hybrid and diesel versions are coming, perhaps by early 2010.

But in an era of expensive gas, the new four-wheel-drive truck with a 390-horsepower, 5.7-liter Hemi V-8 gets about 14 miles per gallon in the city and 18 on the highway, which Chrysler says is competitive.

So far this year, though, gas prices and the down economy have caused buyers to shun the Ram and other trucks, with Ram sales down 27 percent through May.

Yet Steve Bartoli, vice president of global product marketing, thinks the Ram can take sales from competitors.

"In a slightly declining or declining market, the best product wins," he said. "We think we're going to be able to pick up market share even in a tough market."

Bartoli also said history shows truck sales have a big rebound after a long down period, especially because the U.S. population is predicted to grow.

"It's all going to come back," he said. "It's taking a severe hit, there's no doubt, and were feeling that pain right now."

Living through the pain might be tough for Chrysler. Industry analysts have expressed concerns about its cash flow after 2008, and on Thursday, persistent rumors about it filing for bankruptcy protection forced the company to issue a statement saying the speculation was untrue.

At a time when the market is shifting to smaller cars and crossover vehicles, Chrysler's cars aren't selling well and have been criticized for having cheap-feeling interiors.

But Chrysler executives say they're working on a refreshed version of the Chrysler Sebring and Dodge Avenger interiors to make them more like the Ram. They're also working to quiet the cars, and other vehicles, so they meet the competition.

Aaron Bragman, an analyst with the consulting company Global Insight, says the Ram will create a positive buzz in the market, but he predicts Chrysler will struggle until the market rebounds and its improved products hit showrooms. Its current vehicles, he says, are not competitive in their market segments.

"They need a drastic realignment of their products. That takes time and money. They may have money, but they don't have the time," he said.

Wahl Meyer, who was hired from Toyota Motor Corp. after current owner Cerberus Capital Management LP bought 80 percent of the company last August, said Chrysler is listening to customers and making changes quickly.

"Our whole mode of operation right now is being nimble, fast, responding to customers needs as quickly as we can," she said, declining to give specifics on changes it will make to its cars. "You're going to see a lot of changes coming in, the Avengers, the Sebrings, a lot of activity on that side, too. We're balancing it and putting the resources where they need to be."

Chrysler LLC: http://www.chrysler.com