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Chrysler Mulls Ram Production Boost as 1500 Cuts Fuel Use

Photographer: Andrew Burton/Getty Images

A 2013 RAM 1500 truck at the 2012 New York Interantional Auto Show. Close

A 2013 RAM 1500 truck at the 2012 New York Interantional Auto Show.

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Photographer: Andrew Burton/Getty Images

A 2013 RAM 1500 truck at the 2012 New York Interantional Auto Show.

Chrysler Group LLC, whose U.S. pickup sales are growing faster than Ford Motor Co. (F) and General Motors Co. (GM)’s, is considering added production as the automaker readies its new 1500 light-duty truck with better fuel economy.

“We’re looking at ways to ramp up production to keep up with current demand because the current truck is selling so well,” Fred Diaz, president of the Ram truck brand, said during an Aug. 14 interview in Nashville, Tennessee, where reporters test drove the new pickup. “We certainly have a lot of options that I can’t talk about.”

Chrysler is making its eight-speed transmission standard with smaller engines in the 1500, which also will shed weight and add fuel-saving technologies to achieve 21 miles (34 kilometers) per gallon in combined city and highway driving, said Mike Cairns, Ram’s head of engineering. That tops U.S. Environmental Protection Agency ratings of 19 mpg for Ford’s 2012 F-150 flex-fuel version and 18 mpg for GM’s similar 2012 Chevrolet Silverado.

The new truck is crucial for Chief Executive Officer Sergio Marchionne, who owns two Ram pickups personally, because the model is among Chrysler’s most profitable. The automaker’s 28 percent U.S. sales gain this year is boosting profits and offsetting losses for its majority owner, Fiat SpA. (F) Ram pickup deliveries rose 23 percent through July, topping gains of 12 percent by F-Series and 3.5 percent by Silverado.

‘Big Breadwinner’

“It’s a very big breadwinner for Chrysler Group,” Aaron Bragman, a product analyst at IHS Automotive, said in a telephone interview. “The higher fuel economy will make the new 1500 more appealing. The interiors are really, dramatically improved from what we’ve seen. It’s definitely a step up.”

The 2013 Ram 1500 will be available with six- and eight- cylinder engines that improve mileage from their predecessors by as much as 20 percent, according to Auburn Hills, Michigan-based Chrysler. Production is scheduled to begin in September, Diaz has said. The Ram 1500's starting price will be $23,585, including a $995 destination charge, according to a company statement.

Chrysler is equipping the new 1500 with stop-start technology, which conserves fuel by shutting down the engine when the truck is stopped, and shutters in the grille that close to reduce wind resistance at higher speeds.

An air-suspension system similar to what Chrysler recently introduced in the Jeep Grand Cherokee sport-utility vehicle also can lower the pickup by 0.6 inch (1.5 centimeters) to improve aerodynamics in faster driving, or lift the truck by as much as 1.2 or 2 inches in two off-road modes. When parked, the truck can lower to the ground by 2 inches to make it easier to enter or exit the vehicle and load items into the pickup bed.

Weight Reduction

Chrysler has said its Pentastar V-6 engine paired with the eight-speed transmission cuts about 76 pounds (34 kilograms) from the previous comparable powertrain. The V-8 engine and the eight-speed transmission are at least 30 pounds lighter than the pair they replace, the company said.

The new 1500 cuts 30 pounds from the previous model by using lighter-weight steel in the frame, and reduces 26 pounds from the hood by using lighter aluminum.

Chrysler assembles the Ram 1500 at a Warren, Michigan, plant that operates on two shifts. The company also makes regular-cab 1500s and heavy-duty Ram pickups in Saltillo, Mexico.

“We’ve got additional production capacity,” Diaz said. “That’s something that we are watching very carefully so that when that time comes, we can react quickly.”

Chrysler will begin selling its refreshed heavy-duty Ram pickup in mid-2013, Richard Palmer, the company’s chief financial officer, said on a July 31 conference call.

CNG Pickup

The automaker is taking orders from fleet customers for heavy-duty Rams that can run on both conventional gasoline and compressed natural gas. Demand has “far exceeded” the company’s expectations, Diaz said, declining to provide figures.

“We’re starting to get a lot of feedback from retail buyers saying that they’re very interested in CNG,” Diaz said. “As the economies of scale continue with us being able to build more of these -- let’s say we end up deciding to go into a retail initiative with it -- that’s just going to make the cost go down even further.”

Marchionne has argued that natural-gas engines are cheaper than competing technologies and that plug-in hybrid and electric cars, which competitors such as GM, Nissan Motor Co. and Toyota Motor Corp. are selling, present “too many obstacles” such as the recharge time for batteries.

Truck’s Range

Chrysler’s Ram 2500 Heavy Duty CNG pickup for fleet and commercial customers features both compressed gas storage tanks and a conventional gasoline fuel tank, the company said in a March 6 statement. The truck is designed to go 255 miles on compressed natural gas before switching to the 8-gallon (30- liter) reserve tank, extending the range to 367 miles.

The market for natural-gas vehicles could reach 10 percent of U.S. new-vehicle sales in about 20 years, Reginald Modlin, director of regulatory affairs for Chrysler, said in written testimony before the Senate’s Energy and Natural Resources Committee on July 24.

The U.S. “can learn a lot” from how Italy built its market for vehicles powered by compressed natural gas, Modlin told the committee. The market in Italy has expanded thanks in part to incentives that fully offset hardware costs and investments in refueling stations, he said. Fiat has claimed 80 percent of the compressed-natural-gas vehicle market in Europe.

“My own personal feeling is that CNG is going to be the sleeper technology of the future that’s going to make people go ‘Whoa, didn’t see that coming,’” Diaz said. “We’re going to be the beneficiaries of it because of the prowess of our partners at Fiat in CNG technology.”

Chrysler is still contemplating whether to build a mid-size pickup after exiting that segment last year, Diaz said. The automaker ceased output of the Dodge Dakota in August 2011.

“We’re trying to figure out, do we build just the North American small-truck only, or do we build one that fits for all applications and has economies of scale?” he said. “No decision has even come close to being made there.”

To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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