SEMA eNews, Vol. 9, No. 38 – September 20, 2006

GAS PRICES AFFECTING HEMI PRODUCTION

The Chrysler Group has decided to significantly cut production of the Hemi-V8 engine. This decision comes at a time when consumers are making purchase decisions based on gas prices and the fuel economy of new vehicles.

Sources say that the daily build rate for the 5.7L is down to 1,200 for the month of September, compared to 1,500 units for August. “Chrysler is considering further Hemi production cuts by the end of the year as consumers take a shine to more fuel-efficient V6s”. Chrysler’s Saltillo, Mexico, plant currently builds both the 5.7L and 6.1L versions of the Hemi on two shifts, and sources say that Chrysler is considering cutting one of the shifts.

Chrysler built 87,000 fewer vehicles in the third quarter of 2006, compared to the same quarter last year, due in part to “softening truck demand.” Chrysler will be eliminating a shift at its Mack Avenue Engine 1 plant in Detroit starting in January 2007, resulting in more than 300 job cuts.
The Hemi has played a role in helping Chrysler’s bottom line, with consumers willing to pay thousands extra for option packages that include the Hemi. This new-generation Hemi engine quickly became a symbol for the “revitalized Chrysler” and an infatuation with the musclecar era. The 5.7L Hemi is currently available on the Chrysler 300, Jeep Commander and Grand Cherokee, Dodge Charger, Durango, Magnum and Ram pickups, as well as the upcoming Chrysler Aspen SUV. The 6.1L high-performance version is standard on SRT8 models of the 300C, Charger, Magnum and Grand Cherokee.

Despite the fact that the Hemi has been a successfully marketed brand identity for Chrysler, its sales have continued to trail the V8 sales of both Ford Motor Co. and General Motors Corp.
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Gas prices are going down now so hopefully this will change soon.