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Published: Thursday, 6/21/2007

Gas use of Toledo Jeeps cited as problem

BY MARK REITER
BLADE BUSINESS WRITER

To meet tougher fuel economy standards being proposed in Congress, the Toledo-built gas-guzzling Jeep Liberty and Wrangler will need to be outfitted with more fuel-efficient engines, an auto industry analyst said.

Erich Merkle, an analyst with auto consulting company IRN Inc. in Grand Rapids, Mich., said the fuel efficiency of the vehicles and of the Dodge Nitro, also made in Toledo, is troublesome for automaker DaimlerChrysler AG because sales of trucks and sport-utility vehicles factor greatly into the company's profit margin.

"To make their fleet more fuel efficient, Chrysler might have to scale back production on these vehicles to get the gas mileage rating up there," he said. "Unfortunately, the Big Three are so heavily dependent on the truck market."

Fitted with a 6-cylinder 3.7 liter engine, the Liberty and Nitro are each rated at 18 miles per gallon in the city and 23 on the highway. The hot-selling Wrangler, now available in a stretch four-door model, is equipped with a 3.8-liter, 6-cylinder engine rated at 17 mpg in the city and 19 on the highway.

A compromise amendment in an energy bill now being debated in Washington calls for cars to achieve an average fuel economy of 36 miles per gallon by 2022 and light trucks to reach 30 mpg by 2025. The original legislation would require cars and trucks to reach 35 mpg by 2020. The average now for cars is 25 mpg.

Car makers historically have been resistant to legislation for higher fuel economy. However, with the price of gasoline hovering around $3 a gallon and with pressure from environmentalists increasing, the companies are lobbying for slight increases in mileage standards. Some Congress members want much tougher requirements.

As an alternative to conventional internal-combustion engines, Mr. Merkle said, among the options that Chrysler could consider would equipping the Toledo-built vehicles with electric-gasoline hybrid engines or the 2.5-liter turbocharged 4-cylinder diesel engine that the automaker is putting in the Liberty exported to Europe.

Such improvements, he said, could add up to $7,000 to the price of each vehicle.

Analysts also said that multimillion-dollar investments being made by Ford Motor Co. at an engine plant in Lima, Ohio, and by General Motors Corp. at Toledo Powertrain, as well as a joint-venture engine plant involving Chrysler in Dundee, could benefit from changes in fuel efficiency standards.

"There is no doubt that many good things could happen, and there may be significant implications if the fuel restrictions are tightened," said Catherine Madden, a senior analyst with Global Insight.

The Toledo Powertrain plant on Alexis Road is the recipient of more $900 million in spending to assemble more fuel-efficient six-speed transmissions. The rear-wheel-drive units will go into production in October, 2008, and the front-wheel-drive counterpart will be built in 2010.

The Dundee plant - Global Engine Manufacturing Alliance - makes 1.8-liter, 2.0-liter, and 2.4-liter engines that are used in Chrysler, Hyundai Motor Co., and Mitsubishi Motors Corp. vehicles. The Ford plant in Lima is undergoing a $335 million investment to assemble a 3.5-liter engine.

Mr. Merkle said the products manufactured at the transmission and engine facilities would help the auto companies meet higher gas-efficiency standards.

"There is no silver bullet. The savings will come from a plethora of fuel-saving ideas," he said.

Contact Mark Reiter at:

markreiter@theblade.com

or 419-724-6096.



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