NEWARK, DE – Chrysler Group marks the start of production and the culmination of a $180 million investment for the new Dodge Durango SUV at its plant here.

The facility, which operates on two shifts and employs 2,284 people, has a production capacity of 606 vehicles per day.

The launch of the redesigned Durango production last week represents a significant milestone for Chrysler, which is trying to resuscitate sales via the introduction of 10 new products in ’04. Durango is the first salvo in Chrysler’s product-driven turnaround plan, which moves from cost-reduction to revenue-generation mode.

“In the past three years we have been pretty successful in getting our costs down and in control and we will continue to do that in the years to come. The big difference now is that we can start to assess the revenue side seriously with all of the new products we have coming,” Chrysler Group CEO Dieter Zetsche says during a ceremony here. “When I talk about 10 vehicles to come (in the next year), this is the first of those…and therefore, obviously, it is very important.”

Chrysler celebrates production of Dodge Durango in Newark, DE.

The new Durango marks a departure from its predecessor, which Chrysler dubbed the “right-size SUV.” The previous model was celebrated for its 7-seat capacity and manageable size. The ’04 Durango maintains the 7-passenger capacity, although it is now 7 ins. (17.8 cm.) longer, 3 ins. (7.6 cm.) taller and 3 ins. (7.6 cm.) wider. Additionally, the new model will be available with a standard V-6 engine for the first time.

The Durango also features an all-new hydroformed frame, which was developed specifically for the SUV. A coil-spring rear suspension helps to alleviate Durango’s top complaint: ride harshness.

While all of these refinements may seem expensive, Zetsche says the new model actually was less costly to develop and will cost less to build than its predecessor.

“We have a favorable cost position with this vehicle and we know it is a huge, huge step forward over the predecessor. We think…from our cost position, we are in a very good position,” he says. “We invested much less than for the predecessor.”

Chrysler manufacturing executives acknowledge the company spent 10% fewer engineering man-hours to develop the Durango vs. the old model. In one example, Chrysler engineers switched to designed-in wheel-well flares, replacing the added-on parts on the previous model that required additional assembly and engineering hours.

Chrysler also reduced its overall tooling investment at Newark 30% by recycling surplus tooling from other facilities for use on the new Durango. (See related story: Chrysler Cuts Costs by Recycling Durango Tooling)

Even with the savings, Chrysler is concerned that it may have to add another product to Newark to maintain efficiency after the Durango is in the market for a few years.

“I am always worried when we run assets like this. With the capital you put in, you’ve got to run them as much as you possibly can,” Tom LaSorda, Chrysler Group executive vice president-manufacturing, tells Ward's. “There’s still a concern.”

Chrysler’s decision to install flexible tooling and a larger paint shop at Newark will make it easier for the auto maker to add new product when and if it becomes necessary, LaSorda adds.

“To be able to create flexibility that doesn’t cost us much money and putting it in place for when the new model comes (makes sense),” he says. “We have the turnaround space and we have everything queued that in the event we look at the capital plan…and we say ‘OK, what’s next?’ (we can easily add new product).”

The decision on which vehicle would be added to Newark and the exact timeframe remains undecided.

“That’s not a priority right now because we have nine other launches to worry about,” LaSorda says.

Zetsche is confident in the success of the new Durango, although he admits the new SUV may come to market with modest incentives.

“It would be stupid to plan (to launch new) products for the first time ever without any incentives,” he says. “We are very confident it will go along with low incentives, much lower than you will find on many other (competing) products.”

Chrysler is applying some of what it learned from the lackluster launch of its Pacifica cross/utility vehicle to the Durango rollout. The auto maker botched the Pacifica’s launch by filling the initial pipeline with high-content, high-priced versions of the new vehicle, which turned off many potential customers.

Durango will come to market with all options available at start-up. Dealers will be able to select from 2- or 4-wheel-drive models, as well as V-6 and V-8 variants.

LaSorda says Chrysler already has received “tens of thousands” of orders for the Durango.