Chrysler Has a Lot Riding on New LH Car

Chrysler Corp. has a lot riding on its LH car, the first automobile that the No. 3 U.S. car maker has built from scratch in more than a decade.

The new mid-size model could very well determine not only how well Chrysler fares against Japanese competition but whether it remains an independent company in the 1990s, analysts said.

“It’s definitely a make-or-break product for Chrysler in the next couple of years,” said Mike Luckey, automotive consultant and president of Luckey Consulting Group Ltd.

Chrysler plans to launch the LH next October into the key mid-size car market now dominated by the Ford Taurus and Mercury Sable.

But a poor showing would not be just another financial blow to Chrysler, which lost $892 million in the first nine months of 1991.

Since the company has sunk an estimated $750 million into developing the new car, failure could force it to merge with a stronger manufacturer, analysts said.

Chrysler is keeping major design and technical details secret until the car is launched, although automobile experts said they are impressed with what little they have seen of it.

But whether it turns out to be a product that can be produced cost-effectively and sold without major customer incentives remains to be seen.

“I think it’s a really good product from what we’ve seen and that’s a very limited amount. The key issue is whether they can execute it properly,” said Steve Rodgers, president of Autofacts Canada Inc.

The LH, Chrysler’s first brand-new design since it launched the K cars in 1980, will come in four versions: the Dodge Intrepid, Eagle Vision, Chrysler Concorde and a luxury car.

It will be a full-size four-door sedan with a “cab forward” design that puts the passenger compartment further forward on the wheel base for more room.

It will also have a newly designed 3.5-liter V-6 engine, anti-lock brakes, four-wheel independent suspension, standard driver and passenger air bags and a sleek, aerodynamic design.

Analysts said one of Chrysler’s big advantages is its Bramalea, Ontario, plant, where production is scheduled to begin at an annual rate of 200,000 cars in May.

The plant, equipped with robotics throughout, is one of the most modern assembly plants in North America.

Chrysler has also negotiated a deal with the Canadian Auto Workers union that allows it to add a third shift and bump up production to 300,000 a year. That would expand production without significantly raising overhead.

But Rodgers pointed out that the Bramalea plant, which Chrysler took over when it bought American Motors Corp. in 1987, has never operated at capacity.

The Eagle Premier, built there now, never took off. The plant has never produced more than 263 cars a day, and its work force of 1,000 has worked sporadically since 1987.