From: Matt Nauman, San Jose Mercury News, Calif.
Published December 14, 2004 12:00 AM

GM, Daimler to Cooperate on High-M ileage Hybrid Vehicles

Dec. 14—General Motors and DaimlerChrysler said Monday that they're going to work together to make high-mileage hybrid vehicles, an acknowledgment of the growing importance of that segment of the auto market.

The two companies signed a memorandum of understanding and will unveil a definitive agreement in 2005. The gas-electric hybrid system will be used in GM, Chrysler and Mercedes-Benz vehicles, including front- and rear-wheel-drive cars, trucks and SUVs.

In a related development, an auto analyst said Monday that Toyota could announce as soon as next month that it will begin building hybrid vehicles in North America.

"It's not a question of if Toyota will assemble hybrid vehicles in North America, it's when the announcement will be," said Lindsay Brooke, a senior analyst at CSM Worldwide in Farmington Hills, Mich.

It could come early next month at the North American International Auto Show in Detroit, he said.

Toyota could make the Prius sedan at NUMMI in Fremont "as your governor would like" or the Highlander and Lexus 400h SUVs at its Canada plant, he said.

When Toyota said in October that it would double U.S. shipments of the Japan-built Prius to 100,000 in 2005, a company executive was quoted as saying that assembling them in North America "does make sense."

That set off speculation about which of Toyota's North American production facilities, including ones in Mexico and Canada as well as several in the United States, would be selected to make hybrid vehicles.

Gov. Arnold Schwarzenegger's November visit to Japan, which included a meeting with Toyota President Fujio Cho, set off further speculation about NUMMI and hybrids.

Rhonda Rigenhagen, a spokeswoman at New United Motor Manufacturing Inc., said Monday she couldn't comment on any future models to be built at the Fremont plant, which currently makes the Corolla and Tacoma for Toyota and the Pontiac Vibe for GM.

"NUMMI hasn't been considered any more or less than any other facility," she said.

Attempts to reach a Toyota spokesman Monday were unsuccessful.

GM and DaimlerChrysler's combined efforts, according to a joint press release, will result in a new two-mode full hybrid system that will "improve acceleration performance while also improving vehicle fuel economy and range significantly."

GM's hybrid system will first be used in late 2007 in its Chevy Tahoe and GMC Yukon SUVs. A concept version of such a vehicle will be shown in Detroit next month. DaimlerChrysler's efforts will focus on Mercedes luxury cars, although no specific models or timetables were announced.

Toyota and Honda are the leaders in offering hybrid vehicles to U.S. buyers. Toyota has the bestselling Prius and will offer two mid-size SUVs — the Highlander and Lexus 400h — early in 2005. Analysts expect hybrid versions of other Toyota models, including the Camry sedan, Sienna minivan and Tundra full-size truck, to follow. Honda now sells three hybrid cars — the two-seat Insight as well as gas-electric versions of its Civic and Accord sedans.

Ford just started selling a hybrid version of its Escape SUV — it has sold about 2,000 since October — while GM has delivered hybrid buses and some mildly hybridized versions of its full-size Silverado and Sierra trucks to some fleet customers.

CSM forecasts that 20 different hybrids will be on sale by the end of 2007, Brooke said, in addition to what's offered now.

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