Quote Of The Day: Chrysler's Fuel Economy Crunch Edition

As the automaker that's least-prepared for upcoming increases in federal fuel economy standards, it was more than a little surprising to find that Fiat's five year plan for Chrysler did not involve any significant plans for hybrid drivetrain development. But more recently, CEO Sergio Marchionne has said a hybrid Chrysler 300 would be offered in 2013, and the firm hooked up with the feds to work on a hydraulic hybrid drivetrain. And though new CAFE regulations offer generous credits for hybrid pickups, a policy choice that rescues Chrysler's investment in "Two Mode" hybrid technology, more will have to be done. For, in the words of Marchionne [via Automotive News [sub]],

I have no other way of getting to 2025 numbers than by going to hybrids

But Chrysler won't rely fully on hybrids in order to make the significant fuel economy improvements it needs. In fact, it will be relying as much on diesels and compressed natural gas (CNG) drivetrains as anything else.

AN [sub] reports

Marchionne said Chrysler's hybrids would be in addition to a broad offering of diesel-powered vehicles in the United States.

He said Chrysler will begin offering a diesel-powered Jeep Grand Cherokee in 2013, and thereafter most Chrysler Group large vehicles will offer a diesel in the United States.

Which is an interesting revelation. First of all, it calls into question Bob Lutz's analysis of the difficulties of bringing diesels in line with US emissions standards. Lutz argues that the benefits don't outweigh the costs and compromises, but clearly Marchionne disagrees. And yet he clearly realizes that there are easier feats: Chrysler's five year plan called for a stop-start, diesel Wrangler in 2010… and yet that still hasn't materialized. Jeep CEO Michael Manley noted back in early 2010 that

We have no plans at the moment for diesel Jeeps in North America

Clearly that's no longer the case… which means Chrysler's product plans are relatively fluid. And if diesel were a cure-all, we'd be seeing them already. It seems that Chrysler's approach to the new CAFE standards are based more in desperation than any clear strategy. That impression is compounded by Chrysler's talk of CNG drivetrains. Though the technology holds great promise for energy independence, and Fiat is Europe's leader in CNG technology, Marchionne's comments on the prospect of US-market CNG offerings are fairly equivocal:

The likelihood of that happening is uncertain, but I'm still hopeful that at least a sizable portion of the U.S. market will develop CNG capability. And we are ready

In short, Chrysler has no clear plan to become competitive in fuel economy, which I happen to believe is as important for ongoing commercial success as it is for meeting US CAFE standards. Chrysler may beat back some of its over-reliance on full-sized RWD cars and large pickups and SUVS by bringing more Fiat-based vehicles to market, but the projected impact of those models seems to be on the decline. Subcompact B-segment cars planned for Dodge and Chrysler have been canceled, as has a compact Chrysler, and the firm will be stuck with its not-wildly-efficient midsizers until 2014. Moreover, Chrysler is going to have to rebuild a reputation for smaller, more fuel-efficient vehicles at time when its domestic competition will be solidifying their new reps for quality small cars on the strength of products that are already on the marketplace (think Fiesta and Focus, Cruze and Sonic… to say nothing of Hyundai's emerging dominance in this area).

In short, Chrysler is living proof that the auto bailout will not produce the promised "new generation of green cars." And its emerging plan gives no reason to expect that to change anytime soon.