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Chrysler to hit 40-m.p.g. goal

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Chrysler to hit 40-m.p.g. goal

Fiat-based car to be built in Ill. in 2011

By GREG GARDNER

Free Press Business Writer

Chrysler is planning a Fiat-based 40 miles-per-gallon car that will go into production late next year at Belvidere, Ill., say suppliers and consultants familiar with the plan.

A Chrysler spokesman declined to comment. But the first model, based on Fiat's C-EVO underbody, will replace the Dodge Caliber compact crossover, sources say. The car will resemble the Alfa Romeo Giulietta, which Fiat introduced in Europe earlier this year.

Chrysler will get a version of the car, and perhaps Jeep, according to Jeff Schuster, J.D. Power and Associates' director of global forecasting.

Chrysler will soon receive a U.S. Department of Energy loan of as much as $10 billion under a program that subsidizes production of more fuel-efficient vehicles, Reuters reported Wednesday.

Last month, Chrysler began a $500-million expansion of the body shop at its Belvidere plant, but the company has made no formal announcement about which new vehicles Belvidere's 2,350 workers will make. John Gedney, president of UAW Local 1268, said CEO Sergio Marchionne and UAW Vice President General Holiefield have been trying to schedule an announcement at the plant.

Chrysler needs to boost fuel economy in light of the 2016 U.S. standard that all automakers' fleets average 35.5 m.p.g. and increasing competition on fuel-efficient models.

Producing a car in the U.S. that achieves at least 40 m.p.g. is one of three steps by which Fiat can boost its ownership of Chrysler from 20% to 35%. The other steps relate to production of Fiat's 1.4-liter MultiAir engine for the 2011 Fiat 500, and increasing Chrysler's sales outside the U.S.

That MultiAir four-cylinder engine, produced in Chrysler's Dundee, Mich., engine plant, will enable the Fiat 500 to achieve more than 40 m.p.g. Because the 500 is assembled in Toluca, Mexico, it doesn't meet the condition for boosting Fiat's ownership stake. But Chrysler is planning to invest $150 million to produce more MultiAir engines, possibly for vehicles to be assembled in Belvidere.

"The question is can they hit the 40 m.p.g. target on a compact car without a hybrid?" asked J.D. Power's Schuster. GM's base model Chevrolet Cruze gets about 36 m.p.g. on the highway, but a turbocharged version coming later this year is expected to get 40 m.p.g.

Read more: Chrysler to hit 40-m.p.g. goal | freep.com | Detroit Free Press http://www.freep.com/article/20101028/BUSINESS01/10280450/1210/Chrysler-to-hit-40-m.p.g.-goal#ixzz13eshMJBU

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