Chrysler commits to new hybrid cars

Chrysler Group says it will roll out new hybrid vehicles, streamline its cars and trucks and introduce more diesel engines to improve fuel economy in the face of high petrol prices and tougher US regulations.

Chrysler, which is being acquired by Cerberus Capital Management in a $US7.4 billion ($A8.79 billion) deal, has trailed other major, competing automakers in key indicators of fuel economy.

"Chrysler Group is focused directly on improving fuel efficiency across our vehicle lineup," product development chief Frank Klegon said in a statement.

"We don't think there is one silver bullet. We have to fight these battles on many fronts," he said.

Klegon said Chrysler projected that hybrid and diesel alternatives to traditional petrol engines could grow to represent 30 per cent of the US light vehicle market, a roughly tenfold increase from current levels.

US automakers have seen their market share eroded in recent years, a trend many analysts and executives attribute in part to the reputation Japanese automakers have established for better fuel economy.

Like its rivals, Chrysler is also facing the prospect of tougher federal fuel economy standards under a pending bill in the US Senate that would mandate fleet-wide average of 35 miles a gallon (14.86km a litre) for cars and light trucks by 2020.

The current corporate average fuel economy - or CAFE standard - is 27.5 miles per gallon (11.68km a litre) for cars and 22.5 miles (9.5km a litre) for light trucks.

Klegon, who was speaking to reporters at the automaker's proving grounds, said Chrysler would introduce a new "mild hybrid" vehicle equipped with a lower-cost battery pack designed to power the vehicle at stops.

In addition, Chrysler plans to use hybrid technology developed jointly with General Motors Corp and BMW AG in vehicles beyond the two hybrid SUVs it had already announced that it would introduce next year.

Klegon said that "two mode" hybrid system, which can use an onboard electric motor to generate additional power as needed, promised a 25 per cent gain in overall fuel economy.

Chrysler will also offer a clean-burning diesel version of the Jeep Grand Cherokee designed to meet the tougher emission standards imposed in US states such as California.

The technology for reducing nitrogen oxides that will be used in the vehicle was developed by Chrysler's parent, Daimler, which will retain an almost 20 per cent stake in the automaker.

Klegon said Chrysler was considering offering a four cylinder diesel engine in the US market, a common passenger car engine configuration in Europe that could offer fuel economy gains of up to 30 per cent over petrol engines.

Chrysler, now the fourth-largest automaker in the US market, relies on sales of trucks and SUVs, such as the Dodge Durango SUV and RAM pickup truck, for almost 70 per cent of its total sales at a time when US consumers are increasingly demanding lighter and more fuel-efficient vehicles.

Chrysler, which does not expect to return to profitability until 2008, has lagged other automakers in rolling out hybrid vehicles.

Hybrid versions of the Durango and Chrysler Aspen SUVs are not due in US showrooms until next year.