Chrysler part of the used to be Detroit's Big Three and producer of American Motors catalytic converter is now down to being the fourth-largest US automaker. And just recently it has announced that it is dropping its plans for a new Imperial luxury sedan due to the rising gasoline prices and tougher fuel-economy regulations.
It can be noted that the Senate has passed a bill last month calling for automakers to raise their average fuel mileage to at least 35 miles a gallon by 2020 the same proposal in the House would also hold manufacturers to the same standard by 2018.
Chrysler's executives have made the decision within the past few weeks according to the automaker's spokesman Ed Saenz. The Auburn Hills, Michigan-based automaker has unveiled its Imperial two years ago and has scheduled the production to start in 2009 in Brampton, Ontario.
Saenz said, "There was no business case for us to bring it to the market. We will continue to look for a future product for the plant." He also added that the decision has put $597 million of investment in the factory on hold but will not affect any of the plant's 3,500 jobs.
Chrysler will be investing $3 billion in order to produce more fuel-efficient engines and other powertrain components. It is no secret that the automaker has been badly hurt by its reliance on pickup trucks, sport-utility vehicles and minivans that are continuously losing sales as US gasoline prices soared nearly to $3 a gallon. Another reason for Chrysler's decision to divert its production target is the fact that the US Congress is also considering an increase in fuel-efficiency standards.
Tom Libby, an analyst at marketing-research firm J.D. Power & Associates in Westlake Village, California said, "It makes sense not to build a high-end, lower-volume car when the direction of the market is moving toward smaller vehicles. If there is a hole left in Chrysler's product lineup without the Imperial, it's a not a hole in the growing part of the market."
Chrysler has also planned to pull the production of a new vehicle from the Brampton plant if the Canadian Auto Workers didn't agree to give up a wage premium of about C$125 a week. The union has initially rejected the pay provision but then changed its decision last March 11 giving way for the planned investment.
Chrysler is being sold by parent DaimlerChrysler AG to Cerberus Capital Management LP which is purchasing 80.1 percent stake in Chrysler in an agreement that includes a $7.4 billion investment and will be completed this quarter.
It was the Windsor Star in Windsor, Ontario that reported the change in plan of Chrysler which is not to go on with the production of the Imperial.
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Jason Moore, a 35 year old freelance writer from Austin, Texas. He also works as a marketing analyst for an established auto parts store in the country.
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