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Published: Tuesday, 11/13/2007

Chrysler likely to add Jeep Commander to list of cuts, analysts say

BLOOMBERG NEWS SERVICE

Chrysler LLC, the U.S. automaker now majority owned by Cerberus Capital Management LP, may cut more models in addition to the four targeted this month, automotive product analysts said.

The Detroit-made Jeep Commander probably will be added to that list, John Wolkonowicz, an analyst with Global Insight Inc. in Lexington, Mass., said. U.S. sales of the full-sized sport-utility vehicle, introduced two years ago, fell 67 percent in October from a year earlier.

Forecaster Erich Merkle at IRN Inc. in Grand Rapids, Mich., and product analyst Wes Brown of Iceology in Los Angeles echoed Mr. Wolkonowicz's assessment that the Commander is most likely to be cut.

Chrysler plans to stop making the Dodge Magnum wagon and the Chrysler PT Cruiser convertible, Crossfire sports coupe, and Pacifica crossover.

Commander was Chrysler's first entry to challenge the biggest SUVs at other U.S. automakers, offering three rows of seating. Sales totaled 2,691 in October, compared with 16,066 for General Motors Corp.'s Chevrolet Tahoe and 5,931 for Ford Motor Co.'s Expedition.

Commander's sales are down 28 percent this year through October, outpacing a 4.6 percent drop for the full-size SUV market. Medium-sized SUVs, which include the Jeep Grand Cherokee, have fallen 15 percent.

The third-largest U.S. automaker had a 169-day supply of Commanders at the start of the month, trade publication Automotive News reported yesterday. The model averaged an 84-day supply over the previous 14 months, compared with the 60-day industry norm.

"This is just the tip of the iceberg," Mr. Wolkonowicz said of Chrysler's Nov. 1 announcement that four models are to be canceled.

Rick Deneau, a spokesman for Chrysler, declined to comment on whether additional vehicles may be eliminated.

It also announced shift reductions at five plants, including Toledo Assembly.

With Chrysler now under private ownership, it is more likely to make quick, unemotional decisions to return to profit after a $680 million loss in 2006, Mr. Wolkonowicz said. Cerberus invested $7.4 billion in Chrysler, which posted a 3.5 percent drop in U.S. sales through Oct. 31.

SUVs and truck sales have been hurt this year by higher gasoline prices. U.S. retail gasoline has averaged $2.80 a gallon in 2007, up 7.9 percent from a year earlier.



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