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Marchionne Squeezes Mileage for Chrysler With Nine Speeds

July 27, 2012

Marchionne Squeezing Mileage for Chrysler With Nine-Speeds

The Chrysler Group logo is attached to a podium at Chrysler's Jefferson North Assembly Plant in Detroit. Photographer: Bill Pugliano/Getty Images

Chrysler Group LLC’s biggest U.S. investment in the year following its June 2009 bankruptcy exit is about to show up under more of its hoods: transmissions with additional gears to improve performance and boost fuel economy.

Eight-speed transmissions, more common in luxury vehicles made by the likes of Bayerische Motoren Werke AG (BMW) and Volkswagen AG (VOW)’s Audi, will spread throughout Chrysler’s lineup beginning late this year, said Mircea Gradu, vice president of transmission powertrain and driveline engineering. The company will introduce the industry’s first nine-speed transmissions by the first half of 2013, he said.

“I’m convinced that, sooner or later, others will come up with similar solutions,” Gradu said in an interview from his office in Auburn Hills, Michigan, where Chrysler is based. “Hopefully, the time will be as long as possible until they catch up with the technology.”

While rivals tout hybrid cars, plug-in hybrids and pure electrics, Chief Executive Officer Sergio Marchionne is betting he can meet regulatory requirements primarily by improving traditional gasoline engines with the better transmissions. The strategy takes less investment than developing a hybrid and has already helped boost sales of cars such as the Chrysler 300.

The eight- and nine-speed transmissions will help Chrysler meet stricter standards aimed at curbing emissions and raising efficiency. President Barack Obama has proposed U.S. rules requiring automakers to double their corporate average fuel economy, known as CAFE, to 54.5 miles per gallon by 2025.

Alternative Path

Most automakers’ game plans are to use some gasoline- electric hybrids, a modest number of electric vehicles and a substantial amount of improvement in traditional internal- combustion engines, Alan Baum, principal of auto-industry forecaster Baum & Associates in West Bloomfield, Michigan, said in a telephone interview.

Chrysler hasn’t invested heavily in hybrids, and the only electric vehicle it has announced is an electric Fiat 500 subcompact, primarily to comply with California “zero-emission vehicle” mandates.

“Looking at how the various automakers are going to satisfy CAFE, for most of the automakers you can come up with a pretty reasonable path to get there,” Baum said. “And then you look at Chrysler.”

For Chrysler to have a chance of staying in compliance through 2025 without dramatically changing their engines, “the answer is the transmissions” for now, Baum said.

“They’re getting tremendous differentiation from their old product,” said Baum.

Conventional Efficiency

Chrysler’s investments related to its transmissions, which the company has said totals $1.3 billion since 2007, show that Marchionne’s approach is to squeeze efficiency out of conventional gas-burning engines rather than make costly bets on hybrid and electric vehicles that account for a small slice of sales in the U.S. and Europe, said Michael Omotoso a powertrain analyst at LMC Automotive.

“They’re doing basically the bare minimum to satisfy government regulations,” he said. “Their strategy is to meet the standards with minimum investment.”

Marchionne may have little choice: Fiat SpA (F), Chrysler’s majority owner, has seen sales slump amid the European credit crisis, which has sapped demand in Italy, its home market.

Gradu keeps a photograph in his office of Marchionne posing with his team of about 20 engineers after an hour-long meeting about the transmission and its debut in the Charger, which he said is an “illustration of the high-level support that we get in this area.”

Gears Help

Transmissions link the output of an engine to the wheels, and they have multiple gears to switch among as speed increases or decreases. Like the difference between a 10-speed bicycle and a three-speed, more gears means more points where the powerplant can propel the vehicle most efficiently.

The nine-speed transmissions, which Chrysler is developing with Germany’s ZF Friedrichshafen AG, could boost fuel economy of models such as Dodge Grand Caravan minivans by as much as 16 percent, according to the supplier. The predicted gain is in line with the 15 percent boost in highway fuel economy that was achieved when Chrysler offered eight-speed transmissions in Chrysler 300 and Dodge Charger sedans with the 2011 model year.

Adding the eight-speeds to the big, rear-wheel-drive 300 and Charger allowed Chrysler to advertise 31 mpg (50 kpg) per gallon in highway driving, according to the Energy Department’s website. Combined deliveries for the two models are up 68 percent through the first six months of this year.

Kokomo Production

Chrysler will try to replicate that success by starting production of the eight-speeds at its plants in Kokomo, Indiana, late this year, Gradu said.

Chrysler said in June 2010 that it would invest $300 million in the Kokomo plants to accommodate production of the transmissions licensed from ZF.

The transmissions will spread to new models, including the Dodge Dart compact car and Ram 1500 pickups, and may be offered in future versions of the Dodge Challenger muscle car and Jeep Grand Cherokee and Wrangler sport-utility vehicles, Gradu said.

“Anything that will be rear-wheel-drive based, we will consider this,” he said of the eight-speeds. The nine-speeds are intended for front-wheel-drive models, he said, including minivans. The nine-speed transmission will be exclusive to Chrysler when it goes into production by the first half of 2013.

Honda Interest

Honda Motor Co. (7267) is interested in being the next automaker to get the technology, said Omotoso, who is based in Troy, Michigan. Bryan Johnson, a spokesman for ZF in Northville, Michigan, declined to comment.

Honda has said it plans to offer continuously variable transmissions across its lineup, starting with the redesigned Accord midsize sedan this year. Ed Miller, a Detroit-based Honda spokesman, declined to confirm other future transmissions.

LMC Automotive sees Chrysler adding the eight-speed transmission to Grand Cherokee either in the 2013 or 2014 model year, Omotoso said. The researcher also predicts that the eight- speed will be in the Dodge Durango and Maserati Kubang SUVs. The Kubang shares the Grand Cherokee’s underpinnings and is going to be built by Chrysler at a plant in Detroit.

Jeep also may introduce a large SUV called the Grand Wagoneer to replace the Jeep Commander in 2014, Omotoso said. If Chrysler moves forward with that plan, LMC sees the model getting the eight-speed automatic.

“This is going to help them pull ahead of GM and Ford” in terms of which companies have the best transmission offerings, Omotoso said.

LMC expects that Ford and GM will develop their own eight- speeds and have them ready by 2014 for the next generation of Cadillac CTS sedan, Cadillac Escalade SUV, Lincoln MKS sedan and Lincoln MKX crossover.

The nine-speed transmission can go in “essentially any” front-wheel drive platform in Chrysler’s lineup, including the minivans, Gradu said. LMC also expects to see the nine-speed in crossovers for the Chrysler and Alfa Romeo brands in 2013 or 2014, according to Omotoso.

To contact the reporter on this story: Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net;

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.


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