Demand for SUV engine outstrips supply

MSNBC ^ | Aug. 25, 2004 | MSNBC

[klpt]

Despite high U.S. gasoline prices, DaimlerChrysler's Chrysler division on Wednesday said demand for its muscular Hemi V-8 engines was outstripping supply. "What we see is a tremendous shortage of our Hemis," Chrysler President and Chief Executive Dieter Zetsche told reporters. "It's a great problem to have," he added, saying Chrysler had underestimated demand for the big 5.7 liter engine, which is available in Dodge pickups and sport utility vehicles as well as the recently introduced Chrysler 300C sedan and Dodge Magnum sport wagon. Zetsche spoke on the sidelines of celebrations at two Detroit-area assembly plants, as Chrysler launched production of an all-new 2005 Jeep Grand Cherokee sport utility vehicle and a Dodge Dakota pickup truck. The 5.7 liter Hemi will be offered as a option on the new Grand Cherokee, which goes on sale next month. And Chrysler is also building an even more powerful 6.1 liter version of the popular engine. The fuel economy of the Hemis is far from great -- the 6.1 p>

[SeeRushToldU_So]

I was looking at those yesterday while waiting for an interview.

I didn't get to look long, is the 300 frontwheel drive or rear?

[SeeRushToldU_So]

You work with Clark Howard?

[Peach]

Rear wheel drive. Which isn't an issue in the south (where I live). And according to the market research we read before looking, isn't an issue anymore even in snow.

Tests were done on an icy mountain and the car performed beautifully. Don't discount it because of that if you're interested.

[dennisw]

Backseat Driver
That Thang Gotta Hemi?
Jerry Flint, 03.09.04, 8:00 AM ET

The automobile business is very simple. I always say that all you need is a good product and someone to sell it.

More From Jerry Flint

We've just seen that happen at DaimlerChrysler's (nyse: DCX - news - people ) Chrysler division, formerly known as "poor Chrysler," "troubled Chrysler" and the lead candidate for early checkout on that new TV show, Auto Survivor.

But right now Chrysler's got something good and they know how to sell it.

"That thang gotta Hemi?"

Yes, the gas-guzzling throwback to the dinosaur age of cars, the Hemi V-8 engine is reviving Chrysler.

The Dodge Ram pickup truck, a great-looking pickup, ran a record 449,000 sales last year versus 397,000 in 2002. This truck, which was redone for 2003, also got the new Hemi V-8 engine. In January Ram sales were 28,000, up 5% from a year ago. Four engines are offered with the Ram: a six and three V-8s, the biggest is the 345 horsepower Hemi. Would you believe that 52% of buyers opt for the Hemi?

Now Chrysler is offering the Hemi as an option in the new 2004 Durango sport utility, which is bigger and huskier than the old model and winning raves from testers. Dodge sold 9,000 Durangos in January, a 43% gain over January 2003. Three engines are offered on the '04 Durango, but again, over half the buyers, 55%, take the Hemi.

That 55% ratio may fall off it the future but it's sure popular today. This $1,560 option over the base V-6 means profitable business. Chrysler recently announced that it would triple-shift the Dodge truck plant in Detroit.

Chrysler's fourth-quarter profits, a well-connected source tells me, are attributable, in great part, to the roaring success of the Ram pickup and Dodge Durango. And the American half of DaimlerChrysler had an operating profit of $180 million in the quarter, much better than I expected.

It was Hemi to the rescue.



Chrysler will offer the Hemi V-8 in its two newest cars, the rear-drive Chrysler 300C and the Dodge Magnum station wagon. Will these cars light up the sales charts like the trucks? Maybe. The design of these new vehicles is controversial, but they look good to me.

In this launch year, Chrysler figures that they will be able to sell 160,000 of these cars as it ramps up production. The goal for next year is 230,000 units.

One problem--a big one I think. Only the Chrysler division gets a four-door sedan. Dodge will start out with only the Magnum wagon. I believe Chrysler has made a serious mistake by not having a Dodge sedan, and that it will be hard-pressed to sell 50,000 of these wagons this year. A Dodge sedan may come in about 18 months, but a lot of momentum will be lost.

Prices may also be an issue. I figure that a loaded Magnum wagon with the Hemi, navigation system, sun roof and all-wheel-drive (available this fall) will sticker at $37,000. That's getting pricey. Yes, the smaller V-8 and models with the six will cost less, so we'll have to see what happens.

If these rear-drive cars with the Hemis are successful, General Motors (nyse: GM - news - people ) and Ford Motor (nyse: F - news - people ) will have to rethink their strategies. GM doesn't have any V-8 sedans for Chevy or Buick. Ford is emphasizing sixes, too, in its current and near-term products. Yes, you can still buy a Ford Crown Victoria, Mercury Grand Marquis or a Lincoln Town Car with a V-8, but these are ancient designs.

Come fall, Chrysler will also offer the Hemi on its new Jeep Grand Cherokee. If they can figure out any other places it will fit, count on it.

For the most part Chrysler's advertising has been awful. I'm talking about the mother who got pregnant in the back of her Chrysler, the Lingerie Bowl that Dodge had planned to sponsor during the Super Bowl and the commercial of men at the urinal talking about something big. But the Hemi truck ads are a home run. They have made the Hemi part of the language, a New York Times crossword puzzle entry for "powerful car engine."

And check out this cartoon:


Courtesy Stephens Media Group

In trucks, the Hemi is rated 13 miles per gallon city and 17 highway for the Ram pickup. But the Hemi cars will do better. They are lighter, will have 5-speed automatic transmissions, and a system that shuts down four cylinders when cruising on the highway.

Those Hemis don't help Chrysler meet its Corporate Average Fuel Economy (CAFE) standard. But that's another problem. Right now Chrysler's biggest problem is selling enough vehicles--and selling them at a profit.

Before the Hemi's success the news at Chrysler wasn't good. The minivans were steadily losing sales to new Japanese entries, the smaller Dakota pickup was slipping, the new Pacifica started off last year with a thud, the PT Cruiser was fading and the rest of Chrysler's limited passenger car line was floundering.

All of Chrysler's problems won't be solved by the Hemi. But if the new cars coming this summer are successful as the Ram and Durango, then Chrysler just may be that much closer to another genuine recovery.

So What is a Hemi?

First, it is a V-8 engine that Chrysler designed in the old muscle car era. It was terribly powerful, and the trick was the hemi-spherical shape of the top of the combustion chamber. To quote Automotive News, "The design creates more room for extra-large valves, which allow more air to flow through the engine to boost power."

Purists say this new engine isn't a true Hemi. They are right. The combustion chambers aren't exactly hemi-spherical but they are close. Close enough. And the new engine is better for normal use than the old Hemi. And it's big, powerful, makes a good sound and goes like Hades. The name, and those wonderful ads, has caught the public's imagination. The Hemi does gulp fuel but so far, that hasn't seemed to hurt.

[SeeRushToldU_So]

I am glad, I remember looking at one at The Mall in Hilton Head, I liked it, but in 98 it was frontwheel drive. I had a 328 bmer at the time. I didn't like the frontwheel drive.

I might have to take another look now.

[Peach]

A friend had the late 90's version; the newer ones are much nicer. Glad you'll be okay with rear wheel - throws some people off unnecessarily.

[Centurion2000]

bump

[rockrr]

"My coworker has the coolest little car, it gets 50 MPG. "

I have one of those, too.

I keep it slung in davits off the stern of my GMC van (for shore duty ;'}

[Hardastarboard]

Chrysler is the worst one there is. Except for all the others. I've owned several of the major makes (GM, Ford, Chrysler, Mitsubishi), and I tend to return to Fords, mostly because my daddy was a Ford guy, and also when the crappy little #$%%# things break, I pretty well know how to fix them (from much experience).

Bottom line, all automobiles are a pain in the a$$, but when they're running, ya gotta love 'em nonetheless.

[crude77]

bump

[Abcdefg]

What if we could still get 101 octane leaded gas?

[meatloaf]

I think Moroso still sells a gasoline additive that really works. The last time I used it was in a 318 hauling 18,000 lbs. It truly made mountains into molehills. Just running premium I was still getting detonation on hills. With the Moroso, nada and more power to boot.

[B4Ranch]

>>I think it would be unwise to buy a gas guzzler right now. <<

So folks don't worry about the cost of gas when we have so much coming out of Washington -------free from both sides.

[Rockitz]

Bad trany and getting worse when I took it back to the dealer at the end of the lease. The reputation was so bad, the buyout amount was $4000 more than you could sell it for.

[Bonaparte]

As long as you're just dreaming, Laz, why not a McLaren F1? Look it up. Blows the doors off Porsche.

[cruiserman]

My V8 Dodge RAM. 85 MPH cruising speed at 17mpg.

I'm finding it very difficult to believe you're getting 17MPG out of a V8-powered Ram. Probably closer to 10 ;).

[Bulwark]

get a kick out of car makers touting vehicles with 300 hp! Excuse me back in the muscle car days if you didn't crack 400hp straight from the factory it didn't count.

I forget exactly how they measured it, I think it was gross instead of net, but 400hp back then ain't nearly as powerful as a 300hp car today.