Chrysler Sets Up New Hybrid Development Unit

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DETROIT (Reuters) - Chrysler LLC said on Thursday it was creating a new unit to jump-start its development of hybrid and electric vehicles, pushing the newly private automaker into a fast-growing segment where it now lags. Chrysler, which has been hurt by its reliance on sales of trucks and sport-utility vehicles, said it was creating a new organization within the company called "Envi" -- from "environment" -- to develop more energy efficient vehicles. The new development unit will be headed by Lou Rhodes, who had previously headed Chrysler's advanced engineering and vehicle concept development teams, Chrysler said.

DETROIT (Reuters) - Chrysler LLC said on Thursday it was creating a new unit to jump-start its development of hybrid and electric vehicles, pushing the newly private automaker into a fast-growing segment where it now lags.



Chrysler, which has been hurt by its reliance on sales of trucks and sport-utility vehicles, said it was creating a new organization within the company called "Envi" -- from "environment" -- to develop more energy efficient vehicles.



The new development unit will be headed by Lou Rhodes, who had previously headed Chrysler's advanced engineering and vehicle concept development teams, Chrysler said.


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Chrysler Chief Executive Robert Nardelli, who took over at the No. 4 U.S. automaker last month, has said he wants to see Chrysler develop more environmentally friendly vehicles while maintaining muscle car designs like the Dodge Charger.



"The creation of Envi allows us to focus on the development of a new generation of environmentally responsible Chrysler, Jeep and Dodge vehicles," Nardelli said in a statement.



Spokesman Nick Cappa said plans for a new unit to spearhead development of hybrids and other alternative power systems took shape in the past few weeks, after Cerberus Capital Management closed its $7.4 billion acquisition of Chrysler.



The move marked the latest in a series of high-profile changes for Chrysler under Cerberus, starting with the August hiring of Nardelli.



Chrysler also stunned analysts earlier this month by luring longtime Toyota executive Jim Press to join as a second vice-chairman along with former Chrysler CEO Tom LaSorda, who stepped aside to make room for Nardelli.



Toyota dominates the U.S. market for hybrid sales on the strength of the success of its Prius and expects to be selling over 1 million hybrid vehicles annually by early next decade.



Chrysler, by contrast, has trailed other competing automakers in key indicators of fuel economy and faces the prospect of tougher federal fuel economy standards.



The Auburn Hills, Michigan-based automaker relies on sales of trucks and SUVs, such as the Dodge Durango SUV and RAM pickup truck, for almost 70 percent of its total sales at a time when U.S. consumers are increasingly demanding lighter and more fuel-efficient vehicles.



Chrysler has also lagged other automakers in rolling out hybrids. Hybrid versions of the Durango and Chrysler Aspen SUVs are not due in showrooms until next year.



Those vehicles will use hybrid technology developed jointly with General Motors Corp and BMW AG.



LaSorda said the new Envi unit would speed development for Chrysler and be charged with finding new ways of bringing potential buyers into the development process, a break with the normally secretive ways of the industry.



"Envi will operate as a 'start-up' with an entrepreneurial environment," LaSorda said in a statement.



Under the turnaround plan begun under LaSorda, Chrysler committed to invest $3 billion in new plants in Wisconsin, Michigan, Indiana and Mexico intended to produce a family of more fuel-efficient V- engines and components.



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