Automakers scramble to offer more fuel efficiency

By David Bailey

TRAVERSE CITY, Mich (Reuters) - Chrysler on Wednesday outlined plans to launch a new car-based SUV modelled after the Jeep Cherokee, as other major automakers took the spotlight at an industry conference to pitch their own hurried responses to the surging demand for more fuel-efficient cars.

A senior Ford Motor (F.N) executive said the No. 2 U.S. automaker expects small car sales to increase sharply and achieve double-digit growth in profit margins on a class of fuel-efficient vehicles U.S. automakers had long neglected in their home market.

"Ford already delivers the best small cars in Europe," said Mark Fields, Ford's president of the Americas, in a speech at the conference in Traverse City, Michigan. "Now it's North America's turn, and we intend to deliver these small cars profitably."

A discussion of the U.S. auto industry's rushed embrace of more fuel-efficient cars, including smaller sedans and electric vehicles, has dominated the annual industry conference, one of the highest profile gatherings of auto executives.

Facing record gas prices and slumping trade-in values for SUVs, Americans in recent months have defected from the light trucks that dominated sales in the world's largest auto market for over a decade.

For the first half of this year, sales of small cars surged by 11 percent, but sales of more profitable SUVs and crossovers, which still account for the largest share of overall sales, fell 14 percent. Sales of pickup trucks were down 23 percent.

Chrysler Vice Chairman and President Tom LaSorda said the automaker is moving ahead with plans to forge alliances, especially in emerging markets even as it invests $1.8 billion (964.5 million pounds) to retool a Detroit plant to build a more fuel efficient version of the Cherokee.

"When we look at alliances in different regions, we have had discussions with multiple companies in Russia," LaSorda said on the sidelines of the industry event. "In India we have had discussions with many companies."