Chrysler, Mitsubishi Combine Car Plans

AUBURN HILLS December 16, 2002; Jeff Green writing for Bloomberg reported that-- DaimlerChrysler AG's Chrysler and Mitsubishi Motors Corp. will build small and midsize cars on variations of the same chassis rather than as separate projects as planned, a Chrysler executive said.

The automakers will get "significant" savings by pooling basic designs among future versions of as many as nine current models when they begin selling new cars in about 2005, Richard Schaum, Chrysler executive vice president of product development, said. The products are now built on four different chassis designs. He declined to comment on the savings.

"They could probably share as much as 30 percent of the parts between the small and midsize cars if they did it just right," said CSM Worldwide Inc. analyst Michael Robinet, whose company forecasts auto production and predicts future models.

Chrysler and Mitsubishi, 37 percent owned by DaimlerChrysler, are cooperating as they try to increase profits after recovering from losses this year. It costs the automaker about $15 million to engineer the brake systems alone, so they save for each duplicate system eliminated, he said. Chrysler will save $100 million by using a Mercedes-Benz transmission in sedans due in 2004, Schaum said.

The automakers will use the basic chassis and suspension components planned for the next generation of Mitsubishi Lancer and the replacement for the Dodge Neon and stretch and modify them to build the larger Dodge Stratus and Mitsubishi Galant sedans and other midsize models, Schaum said. Originally, the midsize and small cars were separate projects, he said.

"There are huge upfront savings in this approach and it's not unrealistic to talk about hundreds of millions of dollars of savings," said IRN Inc. analyst Michael Wall, who helps suppliers predict automakers' future product plans.

Honda Motor Co. already has a similar process using its Honda Accord design, Wall said.

Honda uses a smaller variation of the Accord in Japan and Europe, the larger version for the U.S. and stretches it even more to create the underpinnings for the Odyssey minivan, he said. Toyota Motor Corp. and other automakers have similar shared platforms.