Jeremiah 29:11

Chrysler unveils Challenger, bets ‘muscle’ image will trump gas fears

BY MIKE RAMSEY BLOOMBERG NEWS

Posted on Sunday, February 10, 2008

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Chrysler LLC introduced the production version of its new Dodge Challenger last week at the Chicago Auto Show, preparing to begin sales of the remake of a 1970 s “muscle car” at a time when U. S. consumers are seeking smaller, more fuel-efficient autos.

The Challenger is a rearwheel-drive coupe that will vie for buyers against the Ford Mustang and General Motors Corp. ’s next Chevrolet Camaro, expected next year.

Remaking the Challenger is a gamble for the third-largest U. S. automaker. Chrysler is banking on the Challenger to draw customers paying $ 3 a gallon for gasoline to a car that, in its initial 425-horsepower version, will drink fuel at the same rate as a large sport utility vehicle.

“I’ve always loved that car, so as soon as they said they were coming out with it, I said I am going to buy one,” said Jon Wessel, a 52-year-old Springfield, Mo., resident. “I’m not going to miss that era again.” In April, Chrysler will begin selling the limited-run 2008 model with a 6. 1-liter, 8-cylinder Hemi engine that gets 18 miles per gallon in highway driving and starts at about $ 38, 000. Dealers have already taken orders for 9, 000, and only 6, 400 will be made for 2008, spokesman Kathy Graham said.

“There’s definitely a market for this. I’d say, an oversubscribed market,” Chief Executive Officer Robert Nardelli said when asked why the company is bringing out a car with low fuel efficiency at a time of rising gasoline prices.

Chrysler will introduce cheaper versions of the car with moreefficient engines later as 2009 models. The size of those engines hasn’t been disclosed.

Tom Libby, an automotive analyst with J. D. Power & Associates in Troy, Mich., said cars such as the Challenger may struggle after an initial burst of sales.

“While there is a market, the market is limited in size,” Libby said.

The Challenger’s annual sales will reach 35, 000 to 45, 000, according to automotive consulting firm CSM Worldwide Inc. in Northville, Mich. Chrysler is projecting 20, 000 to 30, 000.

The Ford Mustang appeared in its current retro form for the 2005 model year and has been a hit, even though sales have recently declined as the vehicle ages. Ford sold 166, 530 Mustangs in 2006 and nearly 140, 000 in 2007, considered big numbers for a niche segment. The car can be purchased for less than $ 20, 000 in 6-cylinder base form, though special “Shelby” supercharged V-8 editions approach $ 50, 000.

The Challenger will use the same mechanical underpinnings as the Dodge Charger and Chrysler 300 four-door sedans, and will be built alongside them at Chrysler’s Brampton, Ontario, assembly plant. It features a five-link rear suspension, a layout that’s widely considered more advanced than the Mustang’s solid rear axle.

Sales of 40, 000 Challengers a year would be enough to be profitable and may boost Dodge’s image, said John Wolkonowicz, a product analyst at Global Insight Inc. in Lexington, Mass.

“While it may look a little odd at keeping with the times, it’s not, and it’s really a good move for Chrysler,” Wolkonowicz said in an interview. “This is the fulfillment of a long-felt want.” Wolkonowicz said there are many people who have been waiting for such a car from Chrysler. The high-performance Dodge Viper, the only other two-door sports car Chrysler offers, is produced in limited numbers. It sells for more than $ 80, 000.

The Challenger will go on sale a full year before GM’s new Camaro hits dealerships, an edge Chrysler hopes will give it an advantage. GM had discontinued the Camaro in 2002 because of falling sales. Information for this article was provided by Mark Phelan of the Detroit Free Press.

RoswellGrey

One major difference between this era and that of the original Challengers (aside from the fact that the 1970s was a LOT better, mainly because I was a LOT younger) is that while gasoline prices are indeed going up, there currently are no gasoline SHORTAGES at the pump. PLENTY of gas is out there -- it's just costing more. In the '70s, the real concern was that often, it was -- at best -- difficult just to GET gasoline, let alone the rising price.

DSkippy

And one thing to consider, I remember seeing pictures of a gasoline costing over a dollar in the early 70's, with well over 30 years of inflation, is gas ridiculous at its current price? I mean obviously cheaper is better, but again, people may not believe it, but in the late 90's we had sub dollar/gallon gas.

Good point about being stranded vs. strapped or having to pay more. That's a subtlety that's being grossly unobserved.

Justinec101

Interesting how analysts predict production of 35,000 - 40,000 challengers, and that dodge would have to sell 40,000+ a year to be profitable. . . while dodge is planning to produce only 30,000. They really do seem unsure of the challenger's success.

kramtrah

time will certainly tell us fellas, and that's another reason to hope and believe that the V6 will do more for this vehicle over the next few years than those of us looking for the SRT and RT V8 options. I also remember the sub $1 gas in the late nineties and recognize there is no shortage insight other than market driven dynamics. Certainly I care about the environment, but practically speaking for this country, large cars are a greater need here with families needing a car seat for every child (here in WA until they are 8 or 4' 9") and enough space for the groceries, or even a box or two. While this may not be my daily driver, or not even a kid hauler for that matter, reality is that it may and should be for most buyers of this vehilcle.

RoswellGrey

If you saw that, you saw something being done illegally. When I started working at a Vickers Oil Co. station in Des Moines, Iowa, in May 1973, gas was already under government price controls, and two days after I started, we had to lower the price of regular from 34.9 cents a gallon to 32.9 cents per gallon (I remember this well, because it was the first time I had to go up on our very HIGH sign to change the numbers). The Arab oil embargo didn't hit till late fall '73, and even then, the price was allowed to rise very SLOWLY because of the government price controls. By the time I quit working at Vickers in about November of 1975, the price ranged between 49.9 cents a gallon to 51.9 cents a gallon. I'm not sure when the government price controls were officially lifted, but it wasn't till the 1990s in Texas that I saw gasoline over $1 a gallon. And even then, in about 1999, it went back down to 98 cents a gallon.

1971Chall

I think it's pretty interesting to hear from people that were driving in that era(sorry, I'm not saying your old!). I was a youngster in 1973 and missed that first go around with the oil. I'm just curious how things today compare with what was happening then. You can read the general events of that situation anywhere on the net but the personal perspectives tell you more about the real effects people seen/went through. Thanks for sharing.

Chris

Why does Dodge have to sell 40k or more to be profitable? Why would they aim to lose money on the Challenger??

DK challenger

dodge is going through some hard times right now.

DSkippy

Sorry Folks, blundered memory on that one.

Roswell, you're absolutely correct, it made it over a gallon by the late 70's, faulty memory on my behalf. I spoke/wrote erroneously. 1000 Apologies.

http://www.randomuseless.info/gasprice/gasprice.html

I do remember it being under a dollar in the late 90's in NJ. My point was that no one knows what the future brings (and some of us don't remember when the past brought...doah!)....so the conjecture is largely academic. Unless of course we get some folks in the executive branch who really want to adjust things in U.S. policy, like they did in the late 70's. High gas prices, inflation, high interest rates, unemployment....