Jan. 7 (Bloomberg) -- DaimlerChrysler AG's U.S. unit said it will extend a 24-year lead in minivan sales with models featuring bigger engines and second-row seats that rotate 180 degrees so occupants can use a table to play games or eat snacks.

New Dodge Caravan and Chrysler Town & Country minivans also come with more safety gear and have a squarer shape. They were shown to reporters today at the North American International Auto Show in Detroit and go on sale in October.

Chrysler, after posting a $1.5 billion third-quarter loss, needs to revive a minivan franchise battered by a stodgy image, Asian rivals and competition from so-called crossover vehicles. U.S. minivan sales at Auburn Hills, Michigan-based Chrysler fell 9.1 percent last year to 370,245, down 31 percent from a peak of 538,807 in 1996.

``To maintain leadership, Chrysler can't lag in terms of features,'' said Tom Libby, an analyst at research firm J.D. Power & Associates in Westlake Village, California. ``They have to protect the image of their minivans.''

Chrysler's minivans have been hurt by reliability problems with transmissions, sliding doors, brakes and suspension components, said David Champion, director of testing at Consumer Reports magazine in Yonkers, New York. The magazine recommended four of 16 Chrysler vehicles to its readers in 2006, compared with 20 of 21 for Toyota Motor Corp.

Still, Chrysler sold 38 percent of the 970,708 minivans purchased in the U.S. last year, more than twice as many as its closest competitor, Toyota.

Forecast for Quality

Eric Ridenour, the Chrysler's chief operating officer, said in an interview that quality is improving and will be reflected in Chrysler's 2007 rankings. Some of the improvement comes from closer collaboration with DaimlerChrysler's Mercedes unit in testing and predicting reliability before vehicles go on sale.

`We've had issues through time, and we have to make sure it doesn't happen again,'' Ridenour said.

Chrysler sold the first minivan in 1983 and gets about a sixth of its sales from the models. The redesign includes squared-off angles between the roof and the rest of the vehicle, a change from the elliptical shape that Chrysler used since 1996.

The new models are also four inches wider and offer optional ``Swivel 'n Go'' second-row seats that can fold flat into the floor or rotate to face third-row occupants. A table can be set up between the rows for games or snacks, and there are two video systems.

Diesel, Hybrid

Chrysler hopes to install its ``Swivel `n Go'' seats in as many as 40 percent of the minivans it builds, Chrysler CEO Tom LaSorda said today in Detroit. The company may also offer the vehicles with diesel- or gasoline-electric hybrid engines to improve fuel efficiency, he said.

``This is a segment we will not walk away from,'' LaSorda said. ``We invented it and we're here to stay.''

General Motors Corp. and Ford Motor Co. canceled future minivan programs in 2006. They'll focus instead on crossovers, which are attracting buyers because of better fuel economy and a smooth ride while offering SUV features such as all-wheel drive.

Crossovers deliver everything that a minivan does except the sliding door and the stigma of being dull, said Robert Lutz, GM's design chief and a former Chrysler official. ``A minivan says you'd rather be driving something else, but you have too many kids.''

A Chrysler executive dismissed Lutz's comments as self- serving.

``We've been No. 1 in the minivan market for 24 years and we have every intention of staying that way,'' said Larry Lyons, vice president of Chrysler's front-wheel-drive product team.

Side Air Bags, Rear Camera

The new minivans also feature an expanded list of standard safety equipment, including traction control, side-curtain air bags for all rows and a rear-facing camera for backing up.

``There's one true method of getting attention and that's to say, 'Wow. There's something new. There's a different look out there,''' Lyons said.

All that may not be enough to revive demand for what was once the default vehicle for families with children.

Industrywide, U.S. minivan sales dropped 12 percent to 970,708 in 2006, more than the 9.9 percent decline for full-size pickups and the 8.3 percent decline for truck-based SUVs.

Lyons predicted minivan sales will stabilize, in part because the older end of ``Generation Y'' -- the 75 million U.S. residents born between 1978 and 1997 -- are entering their prime child-bearing years.

``Families still use it and want it, even though they might not want to admit it,'' LaSorda said.

Flexible Factories

Just in case, Chrysler's all-new minivan design is flexible enough that derivative models could be built along the same assembly line, Lyons said. The company already builds Pacifica crossovers at its minivan factory in Windsor, Ontario.

Chrysler said today it will continue building minivans at a factory in St. Louis, along with the Windsor plant.

As Chrysler works to stem the defection to crossovers, it also faces more competition from minivans by Asian automakers. South Korea's Hyundai Motor Co. released its Entourage model last year, while sales of Honda Motor Co.'s Odyssey increased 2.1 percent and Toyota's Sienna gained 1.2 percent.

Chrysler's redesign may help it catch up to competitors that added more features to their minivans. Honda increased the cargo- carrying capability with the first third-row seat that folded flat into the floor in 1994; Chrysler caught up a decade later. Honda also introduced the first power sliding door on the left side of its minivan in 1998; Chrysler caught up in 2001.

Horsepower

The U.S. company currently lags behind rivals in minivan horsepower. Toyota began selling models equipped with a 3.5 liter, 266-horsepower V-6 in 2004. Chrysler's biggest engine on its current minivan has just 215 horsepower.

Chrysler was the first company to offer fold-flat second-row seats in 2004, after spending $400 million to develop the technology, which is also used for the third row. Chrysler will offer a 4.0 liter, 240-horsepower V-6 engine with a minivan-first six-speed transmission in its new models.

Dodge Caravans spent an average of 120 days on dealer lots before being sold during the fourth quarter of 2006, up from 66 days a year earlier, Libby said. Honda Odysseys and Toyota Siennas spent 35 days on dealer lots in the most recent quarter.

Chrysler also makes less money from minivans than it used to, according to David Healy, an analyst with Burnham Securities in Sierra Vista, Arizona. They're only ``slightly'' profitable, he said.

Chrysler's Lyons disputed that, saying minivan profit margins are ``significantly above break even'' and are likely to improve with the new models.

The company hasn't announced its prices for the new minivans. ``We won't go crazy and go way higher than where we are now, or where are competitors are in the marketplace,'' said Kathy Graham, a Chrysler spokeswoman.

To contact the reporter on this story: John Lippert in Southfield, Michigan, at jlippert@bloomberg.net.

Last Updated: January 7, 2007 19:07 EST