Go Figure: Chrysler says demand for Hemi V-8 outstrips supply

DETROIT, Aug 25, 2004; Reuters reported that despite high U.S. gasoline prices, DaimlerChrysler's Chrysler division on Wednesday said demand for its muscular Hemi V-8 engines was outstripping supply.

"What we see is a tremendous shortage of our Hemis," Chrysler President and Chief Executive Dieter Zetsche told reporters.

"It's a great problem to have," he added, saying Chrysler had underestimated demand for the big 5.7 liter engine, which is available in Dodge pickups and sport utility vehicles as well as the recently introduced Chrysler 300C sedan and Dodge Magnum sport wagon.

Zetsche spoke on the sidelines of celebrations at two Detroit-area assembly plants, as Chrysler launched production of an all-new 2005 Jeep Grand Cherokee sport utility vehicle and a Dodge Dakota pickup truck.

The 5.7 liter Hemi will be offered as a option on the new Grand Cherokee, which goes on sale next month. And Chrysler is also building an even more powerful 6.1 liter version of the popular engine.

The fuel economy of the Hemis is far from great -- the 6.1 liter engine featured on a high performance version of the 300C gets about 14 miles per gallon in city driving and 19 mpg on the highway -- but they hark back to Detroit's muscle car days of the 1960s and '70s, when horsepower was king, and have clearly resonated with consumers.

To meet demand for the Hemis, Frank Ewasyshyn, Chrysler's head of manufacturing, said the company was looking at expanding capacity at the plant in Saltillo, Mexico, where it builds the engines.

"We can expand the capacity of the current site," Ewasyshyn said of the Mexican plant, which builds about 460,000 engines a year, including roughly 368,000 Hemis.

"We're still discussing our ability to respond to the market," he added.

Like its crosstown rivals General Motors Corp. and Ford Motor Co., Chrysler makes most of its automotive profits from sales of pickups and SUVs.

In his remarks to reporters, Zetsche said he had seen "no impact of higher fuel prices whatsoever" on sales of the fuel-thirsty vehicles.