Chrysler aims to rejuvenate lineup

AUBURN HILLS, Mich. -- Chrysler plans to pump life into its car lineup with technology from its new Italian partner, Fiat SpA, and says it has the cash to do it as it starts to combine the two automakers.

CEO Sergio Marchionne, who also runs Fiat, began unveiling Chrysler's new five-year business plan on Wednesday. The plan includes multiple new vehicles for the Chrysler, Jeep, Dodge and Ram brands, most based on Fiat's more efficient transmissions and small engines.

He said the troubled company's cash has grown by nearly $2 billion since it exited bankruptcy protection in June, and its operations broke even in September because of savings from job cuts and factory closings by the prior owner and through combining Chrysler and Fiat's operations.

But future growth depends on offering better cars.

The company's mid-sized sedans, the Dodge Avenger and Chrysler Sebring, along with many other models, have flopped.

Chrysler said it will update these cars to make them more comfortable and quieter and use Fiat technology to replace them in 2012. That could make it competitive in the largest part of the U.S. car market.

In addition to the midsize car, Chrysler will also introduce four new Dodges by 2013, as well as new exteriors, interiors and engines on most of its current product lineup.

The new Dodges include a seven-passenger crossover vehicle, a mini-car and a compact.

Ralph Gilles, the company's chief designer who became head of Dodge, said the brand will have crisp handling, be quieter, more fuel-efficient and have more luxurious interiors.

The company also is lowering prices to boost sales and generate more cash as it fixes its struggling lineup.

The new and revamped vehicles should please Chrysler's dealers, many of whom have been frustrated by a lack of detail from Marchionne's management team.

But Aaron Bragman, an auto analyst with IHS Global Insight, said there were many questions remaining, including what the vehicles will look like and how Chrysler will pay for such a major turnaround. Marchionne has said Fiat wouldn't contribute any of its own money to Chrysler.

"I want to see if the vehicles they'll be producing two years from now are going to resonate," Bragman said.

It will be tough to win back car buyers, who are skeptical of Chrysler's quality.

The automaker's sales are down sharply this year as buyers flee to other brands and a weak U.S. economy curbs demand for autos.

Chrysler lost upward of $8 billion last year and would have run out of cash without government help.

Marchionne's Fiat, which now owns 20 percent of Chrysler with an opportunity for more, was put in charge of rescuing the 84-year-old automaker by the U.S. government, which so far has provided roughly $15 billion in aid.

Chairman C. Robert Kidder said the company intends to go public and repay its loans "with all deliberate speed."

The company must also tackle quality problems. Doug Betts, senior vice president of quality, said that work is under way.

When he arrived late in 2007, it took 71 days for someone to begin working on a problem, so the Chrysler's ability to raise its quality fell behind rivals.

"Seventy-one days goes to zero days," Betts said.

Chrysler's had $5.7 billion in cash at the end of September, up $1.7 billion since June. As recently as December, though, the automaker was practically out of cash. The new cushion will allow it to sink money into product development, something that is crucial to rejuvenate sales.

Under the hood, Fiat plans to replace most of Chrysler's engines with its own, with many larger engines replaced by four-cylinder ones.

Joe Veltri, Chrysler's product development chief, said he has a lot more funding to revamp products and create new ones. Chrysler can go to a cupboard of Fiat frames, engines and transmissions to develop new products, a vast difference from Chrysler's prior owner, Cerberus Capital Management LP, which was not a manufacturer but a private equity firm.

"We have far more tools to work with," he said.