Chrysler Group LLC is banking on improved fuel economy and passenger-safety upgrades to remain competitive in a season that sees the auto maker starving for new product.

As the industry ramps up new-model output in the coming months, the ’10 Dodge Ram heavy-duty pickup and a redesigned Jeep Grand Cherokee – set for launch next year as an ’11 model – comprise a 2-vehicle parade of new offerings while Chrysler prepares to restock its pipeline with products inspired by Fiat Auto SpA.

The Italian auto maker acquired a 20% stake in Chrysler following the U.S. auto maker’s emergence from bankruptcy in June.

Highlighting the list of content Chrysler is using to buy time: a new 2.2L 4-cyl. common-rail diesel engine in Dodge Caliber C-cars bound for the international market and “Interactive Decel Fuel Shut-Off.”

Daimler AG's Mercedes-Benz division supplies the new diesel engine. VW AG provided the previous mill.

Rated at 163 hp (DIN), the new diesel mill generates maximum torque of 236 lb.-ft. (320 Nm), a 16% power boost and a 3% torque advantage over the outgoing 2.0L diesel. Towing capability is improved 25%.

A beneficiary of dual balance shafts and sound-deadening material, the new engine, which meets Euro 5 emissions levels, produces 25% less vibration and harshness.

Dubbed IDFSO, fuel shutoff will be featured on each of the three engines available in the light-duty ’10 Dodge Ram fullsize pickup. The auto maker’s volume flagship can be had with a 3.7L V-6, 4.7L V-8 or 5.7L Hemi V-8.

Fuel shutoff, which portends efficiency improvements of up to 1%, also will be featured in the 3.7L V-6 offered in the Dodge Nitro cross/utility vehicle and its SUV platform-mate, the Jeep Liberty.

Ford Motor Co. introduced the technology this year.

On the safety side, active head-restraints will be featured as standard equipment in the Chrysler Sebring and Dodge Avenger midsize sedans, and the Chrysler Town & Country and Dodge Grand Caravan minivans. Supplemental side airbags become standard on Chrysler 300 and Dodge Charger fullsize sedans.

However, industry observers wonder if Chrysler has enough time to maneuver in a market that has shown little sustained improvement: “2010 is going to be another difficult year for them,” says Erich Merkle, president of Michigan-based consultancy Autoconomy.

“Chrysler has almost an entire product lineup that is in need of attention,” says Merkle, who predicts the auto maker’s market share could fall below 5% by year’s end.

Through July, Chrysler held 9.6% of the U.S. market, down from like-2008’s 11.3%, according to Ward’s data.

“They have the Grand Cherokee launching, but the SUV segment is not very competitive and fragemented,” Merkle says. Sales of all SUV segments combined were down 47.1%, exceeding the total light-vehicle market’s 32% decline, according to Ward’s.

“At best, the (new) Grand Cherokee could stabilize sales for one product under the Chrysler umbrella,” he adds. “It's not enough.”

The redesigned Grand Cherokee is set to see production next year as an ’11 model. It will feature a V-6 engine, the first application of Chrysler’s new Pentastar V-6 engine family.

Meanwhile, the heavy-duty Ram benefits from greater refinement and is available for the first time in a crew-cab configuration.

Absent from the auto maker’s lineup is the highly anticipated rollout of its UConnect Guardian telematics program. As the new Fiat-led management team reviewed Chrysler’s plans, friction developed with supplier Hughes Telematics Inc.

“At this time, Chrysler is looking for other solutions for our telematics goals that align appropriately with the company's new direction,” spokesman Nick Cappa tells Ward’s.

Also missing for ’10 are the distinctive strakes on the Sebring’s hood.

Additions are softer materials in the Caliber’s interior and steering-wheel-mounted audio controls on the Dodge Challenger.

Steering-wheel-mounted controls, which are expected to proliferate across Chrysler’s product lineup, are consumer wants the auto maker says it discovered through extensive customer feedback analysis.