Chrysler's partnership with Cummins not altered by Fiat deal

By Nicholas Zeman | November 20, 2009
Chrysler suspended operations at its primary diesel factory earlier this year and finalized a merger with Fiat Group, which is a leader in diesel production. There has been much speculation about what the merger means for Cummins, which has been a Chrysler supplier for years but had its contract cancelled as part of Chrysler's bankruptcy proceedings earlier this year.

There was a brand new light-duty engine for the Dodge Ram 1500 that Chrysler did not assume because of the bankruptcy. "Our all-new Cummins engine will offer future Dodge Ram 1500 customers the ultimate in terms of fuel economy, refinement, reliability and durability," Frank Klegon, executive vice president of product development for Chrysler Group LLC, said last spring. "It's another example of Dodge bringing new, clean, quiet diesel technology to the marketplace."

But the new diesel 1500 never hit showrooms. This caused Cummins to lay off hundreds of employees temporarily, but things have improved since Chrysler's restructuring. "So much has changed," said Carol Lavengood, media liaison for Cummins. "We have a new contract for the 2010 2500 engine and we have an increased number of orders, and we even recalled some of our employees that were laid off."

The production and marketing of the lighter 1500 model truck has changed slightly because of the technologies and options available to Chrysler now as a result of its partnership with Fiat, said Nick Cappa, spokesman for Chrysler.
Outside of North America, Cummins is planning to manufacture a 2.8- and 3.8-liter light-duty diesel engine in a deal with Photon of China. In Europe, diesel-powered models account for more than half of Chrysler's sales. Diesel versions of numerous vehicles continue to be popular, including the Chrysler 300C, Chrysler PT Cruiser, Jeep Grand Cherokee and Jeep Compass, as well as the Dodge Caliber and Jeep Wrangler.

Chrysler announced that the first Fiat it plans to offer is the Fiat 500 minicar, arriving at the end of 2010. Fiat will have the lead in the development of models with 1.8-liter and larger diesel engines. That will not necessarily change the relationship, however, between Cummins and Chrysler. "The Cummins engine is a legendary engine in the Ram line," Cappa said. "But Fiat also has a long history with the diesel engine and even invented the common rail diesel technology, so we look forward to adopting some of their designs, like the multijet." Chrysler's new five-year plan is based on incorporating 12 Fiat-designed models by 2013, ending production of six to eight underperforming models and revamping all 12 models they intend to keep by 2012, according to Joe Veltri's "product plan" presentation released Nov. 4. The new Fiat cars won't arrive in Chrysler's lineup until 2012 or 2013, except for the 500 city, but Fiat will be adding its designs to virtually every type of Chrysler product.
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