Show Me the Hemi!

[bling300c]

I thought this was interesting ....

Show Me the Hemi!
Ward's Dealer Business August 1, 2005


According to the latest cadre of instant experts on Detroit's woes, General Motors and Ford would be in fine economic shape today if only they currently were selling hybrid-electric cars and trucks like Toyota.

How ironic, then, to hear from the president of Harbour Consulting that a big, bad V-8 deserves the lion's share of credit for pulling Chrysler out of its most recent slump.

In briefing reporters last month on the results of his company's latest annual report on manufacturing efficiency, Ron Harbour says while the hot-selling 300 sedan is getting most of the credit for reviving profits at Chrysler, the 340-hp Hemi V-8 probably has played an even larger role.

While the popular 300 sedan certainly is having a major impact on Chrysler's bottom line, the Hemi's influence is even more pervasive: It is available on numerous high-volume Chrysler products in addition to the 300C sedan, including the Ram fullsize pickup, Jeep Grand Cherokee, Dodge Durango, the brand-new Dodge Charger and the upcoming Jeep Commander SUV.

Even though we hear every day that consumers are shunning gas-guzzlers, the overall Hemi take rate on vehicles where it is available is 43%. The engine costs at least $1,000 extra on a Ram pickup, and in most cases it is bundled into packages that cost much more. In the new Charger, where the Hemi only is available in a package that costs $7,000 extra, the take rate is 72%.

The Hemi has a premium image, but Harbour points out the engine features a simple, old-fashioned overhead valve design that is easy and inexpensive to build. The Hemi also is produced in a highly efficient, low-cost plant in Saltillo, Mexico.

It does not feature overhead cams like most state-of-the-art engines, but the Hemi is not low-tech. Powertrain experts say the Hemi is very sophisticated in the way it manages combustion, which is why it delivers such addictive performance.

Combine low costs with an incredibly high desirability factor that makes consumers happily pay thousands extra, and you've got a true money machine.

"They've created an image in the market that pulls people up to a richer (price) level. That's how you make money in this business," says Harbour.

Last year, Chrysler sold 296,182 vehicles equipped with Hemi engines, compared with 172,186 in 2003. In 2004, the auto maker reported an operating profit of $1.9 billion, versus a $685 million loss the previous year.

In the fiscal year ending March 31, Toyota showed a profit of $11.1 billion, up 0.8% from the previous year. In 2004, global sales of six Toyota hybrid-electric vehicles reached 134,600, 93% of them the second-generation Prius.

Although this is not an exact apples-to-apples comparison, it is reasonable to assume that hybrids - which so far generate meager, if any, profit - contributed little to Toyota's prodigious earnings last year. The gas-gulping Hemi, however, was a primary factor in Chrysler's turnaround.

Before suggesting, as New York Times columnist Thomas L. Friedman did, that Detroit auto makers are idiots for not focusing all their attention on building fuel misers and pursuing hybrid technology as aggressively as Toyota, critics should do what two smart reporters named Bob Woodward and Carl Bernstein did 30 years ago: Follow the money.

Drew Winter is editor of Ward's AutoWorld.

For more information on this publication, or to subscribe to the print edition, visit http://www.wardsdealer.com.

Copyright 2005 by Primedia Business Magazines & Media, Inc.. All rights reserved.

[rdmac]

Yes that is interesting. With gas as it is something gotta give going forward though.

Bob

[Northern Rider]

I figure two thirds of the market want fuel efficient, little econoboxes.

The other third want a large, comfortable, safe vehicle with real power - at an affordable price.

Right now, that would be the LX vehicles from Chrysler.

Is there anyone else building what this segment wants?

I don't see demand slowing down anytime soon.

[Rambit]

There must be something to it as they built their millionth hemi on Aug 11th, and I got two of 'em!

Rambit

[rdmac]

Good points. I just remember back in the seventies and early eighties what happened with the fuel shortage and the decline of HP and big V-8s. Up until than the HP wars were on. It just seems there is a HP war going the last few years and it is really peaking at the same time these gas issues are. I don't know it all seems earily the same. Probably there is something different now - supply and demand - what people want in cars. Hey if the bubble does burst we have ours. Can anybody say K Car.

Bob

[Dante]

Personally, I'm sick to death of hearing about econocars. I fed up with look-alike, European, aerodynamic, jellybean-styled, boring, fuel-efficient vehicles made for people living in postage stamp sized countries. I like big, solid, high-powered, North-American, stylish, meat-ripping, solid, crash-tested, highway family-carriers. I love my CSRT-8. That's what I want in cars. Keep your under-powered 4-bangers, and gutless hybrids. Sell them to people who will help keep the fleet MPG average down so that I can drive my HEMI. Woo Hoo!!!

[bling300c]

Originally Posted by Dante

Personally, I'm sick to death of hearing about econocars. I fed up with look-alike, European, aerodynamic, jellybean-styled, boring, fuel-efficient vehicles made for people living in postage stamp sized countries. I like big, solid, high-powered, North-American, stylish, meat-ripping, solid, crash-tested, highway family-carriers. I love my CSRT-8. That's what I want in cars. Keep your under-powered 4-bangers, and gutless hybrids. Sell them to people who will help keep the fleet MPG average down so that I can drive my HEMI. Woo Hoo!!!

The future - NOT

[Model 57]

I'm tired of cars that all look alike, all shaped like they sould be used for an enema. Give me something with some real class, has some real perfomance AGAIN, and won't be mistaken for anything else.
That's why I bought the 300C. I should get a highway mileage check on it next week, as I will be heading to the sunshine state. Going to Palm Springs for a few days.

[kevenj]

I remember the early 70's gas crunch ( I was 10 in 1973) and it is somewhat similar but one thing to remember is back then, A good solid powerful car got 7 miles per gallon! not 20+ . And when gas hit a buck a gallon in 1979 that was still more money in real dollars than the $2.75 to $3.00 we have now. Having said that, I still wouldn't mind lower gas prices :-)

[PPI]

Interesting that the article didn't bring up MDS. I for one made the decision to go for a HEMI because of the MDS. Its like getting all the extra power for free at the gas pump. I average better gas mileage then a V6, but have more power them most V8's. That was totally a deciding factor. I don't understand why MDS isn't put in more V8's.