Rising gas prices could force future cuts at Chrysler

Chrysler chairman and CEO Robert Nardelli said Friday the company might see the need to get rid of some larger vehicle models or further shrink capacity if gas prices continued to rise. Though plans are "not yet" in the works, Nardelli said it wasn't out of the question.

"The operative statement is not yet. We'll continue to sense the market," he told a small group of reporters here after an event recognizing military appreciation month. Nardelli said some of its customers were shifting out of trucks and into sedans like the Chrysler Sebring amid gas prices that at or above $4 a gallon. Chrysler is moving quicker to bring advanced vehicles to market, he said.

"We are accelerating our technology in response to the environment," Nardelli said. "…We see a segment shift from trucks." He said the company would move to find new smaller vehicles if that's what customers want and that the company would acquire them through partnerships with other automakers rather than produce them if it were more expedient, saying "we won't suffer from the not-invented here syndrome."

Nardelli said Chrysler would agree to similar deals like the one struck with Nissan to share products "that make financial sense." He said the company had no plans to join Ford Motor Co.'s lead in increasing job cuts or production.

"You have to be continually reactive. Today change is the only constant in business," Nardelli said. "We think we're good today."

Nardelli also said:
• That the company planned to continue with its plans to open an axle plant in Marysville, which is under construction.
• He praised the recent labor deal with the Canadian Auto Workers union: "We feel good about it and most importantly there's no disruption."
• And he disclosed that auto executives at a May 8 meeting with California Gov. Arnold Schwarzenegger had offered suggestions how the California emissions standards could be "modified so manufacturers can really" operate.

Nardelli spoke forcefully in opposition to California's proposal to reduce tailpipe emissions standards by 30 percent by the 2016 model year when he met on Feb. 21 with Arizona Sen. John McCain, the Republican presidential presumptive nominee.

A person familiar the meeting told The Detroit News that Nardelli had bluntly told McCain the California standards could "kill Chrysler." Nardelli didn't dispute the characterization. Nardelli said the government should offer incentives for domestically produced hybrid vehicles like the new 2009 Aspen and Durango hybrids that will go on sale later this year. The Chrysler CEO was in Norfolk to donate a vintage World War II jeep to the General Douglas MacArthur Foundation along with a $100,000 from the Chrysler Foundation. Chrysler has been holding a number of events to highlight its support of the U.S. military. Detroit News