FRANKFURT – Despite growing consumer distress about the volatile price of gasoline, Chrysler Group has no plans to build a fuel-efficient B-segment car, nor will it accelerate diesel-engine development.

The U.S. market is as hostile to B-cars as consumers are to rising pump prices, says Tom LaSorda, Chrysler president and CEO. Meanwhile, the auto maker favors diesel power, but stringent U.S. emissions standards pose obstacles that currently are insurmountable.

LaSorda makes his remarks in a wide-ranging interview at the Frankfurt auto show – just 12 days after inheriting Chrysler's leadership from Dieter Zetsche, who this month became DaimlerChrysler AG's chairman and assumed the top job at its Mercedes-Benz division.

LaSorda defends Chrysler's coolness toward B-cars, noting the popularity of its Multi-Displacement System for larger-displacement engines. The technology shuts down half an engine's cylinders when not needed and improves fuel economy up to 20%.

Tom LaSorda

While B-cars are popular in other markets, their margins are too thin to rush into a U.S. rollout, he says. But if Chrysler were to consider adding such a product to its American lineup, it would recruit a partner to offset product-development costs.

“It's a tough market to make money in,” LaSorda says. “It's something we wouldn't do on our own. To enter a new market with a new platform is extremely expensive. We're talking in excess of $1 billion.”

He mentions Hyundai Motor Co. Ltd., noting Chrysler has enjoyed successful partnerships with the South Korean auto maker. But LaSorda stresses there are no concrete plans for a B-car launch.

Meanwhile, a gallon of regular gasoline in the U.S. costs an average of $2.99, up from $1.84 this time last year, according to the American Automobile Assn. To cope, many motorists are driving less.

LaSorda is confident Chrysler can compete in this climate as the auto maker unveils a pair of C-segment Jeep products powered by 4-cyl. engines and aimed at the entry-level market. (See related story: Jeep Gets FWD, Caliber Gets List of Firsts)

“We see growth in that segment, for sure,” he says.

As for diesels, LaSorda says the technology portends substantial benefits for light-vehicle applications. But again, Chrysler would need to partner with Mercedes or Volkswagen AG, both of which supply diesels for an array of Chrysler products in Europe.

“The Chrysler Group, ourselves, we don't have any diesel capacity,” he says.

Even when low-sulfur diesel fuel begins a U.S. phase-in starting next June, Chrysler's European diesels are not a plug-and-play proposition.

“They are completely different calibrations,” says Chrysler product guru, Eric Ridenour.

After domestic diesels produced discouraging results in an ill-fated market experiment during the 1980s, consumers are warming up to the technology. Chrysler launched the '05 Jeep Liberty with a diesel late last year and consumer demand is so heavy, the auto maker has increased production of the vehicle.

Going forward, LaSorda admits, chances are “more than 50/50” that Chrysler will launch a second light-vehicle diesel product.

LaSorda also touches on:

  • Cost-cutting, saying prices for petroleum-based materials are so high, the auto maker must offset them by efficiencies in “other areas.”

  • The effects of Hurricane Katrina, noting Chrysler dealers in the Gulf region were hit hard, but “they're asking for cars again. We've sent down trailers. We've sent down generators…to set them up in temporary locations.”

  • The competition, putting quality leaders Toyota Motor Corp., Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. on notice. “There's no knocking that they're good,” LaSorda says. “We're going to be better. We can compete, whether it's with Japan, Korea, or anybody.”

emayne@primediabusiness.com