Chrysler at risk if gas prices stay high

As political uprisings spread across the already volatile Middle East, oil prices have risen steadily as expected. While this has an affect on all of us when we go to fill up our tank, it should also be making at least one domestic automaker nervous.

GM and Ford seem poised to weather a prolonged gas spike, thanks to great compact-segment entries like the 2011 Cruze and 2012 Focus. Chevrolet will also launch a redesigned subcompact (and changing the name from Aveo to Sonic, though that's a topic for another day) to better fight against Ford's strong selling Fiesta, as well as Honda's Fit, Toyota's Yaris, and Hyundai's Accent.

2011 Dodge Charger

But, when you look at the product lineup over in Auburn Hills, the picture isn't as peachy. The top of their portfolio is great: The redesigned Chrysler 300 and Dodge Charger have style, power, and refinement that puts them near the top of their respective segments. The new Dodge Durango and Jeep Grand Cherokee fullsize utilities should give the GM Lambdas (Traverse/Acadia/Enclave) and the Honda Pilot / Toyota Highlander something to worry about. As you move down the product line, though, things start to get shaky. In the fiercely competitive midsize segment, Chrysler's brands are forced to compete with the improved-but-still-lacking Dodge Avenger and Chrysler 200 (formerly Sebring). One notch below that, and Chrysler's offerings in the compact segment are almost non existent.

We've seen gas spikes before, and when we start measuring them in months instead of weeks, car buyers tastes change dramatically. Should this latest jump stick around, what fuel misers will Chrysler have to offer? Sure, the C-segment Dodge Caliber is still available, but it's hatchback only bodystyle and unimpressive interior appointments severely limit its marketability. The Caliber delivers an estimated 23/31 fuel economy, compared to 24/35 for the Focus and 26/36 for the Cruze.

The only other compacts available from the Pentastar are two small utilities from Jeep: Patriot (20/22mpg) and Compass (23/29). They have no offerings in the popular compact sedan arena, nor the growing subcompact segment.

It's hard to blame Chrysler, though. Their R&D budgets were stripped bare by Daimler in the so-called "merger of equals" (1998-2007), then mostly neglected by Cerberus Capital Management until the company was forced into bankruptcy in 2009.

Now controlled by Italian-based Fiat, Chrysler has access to a wide array of platforms, powertrains, and technologies that, if managed correctly, could help the company offer highly competitive models across all segments. All of those assets don't help now though, as Chrysler will be forced to weather this spike without any real contenders in the segments that are most likely to grow as gas prices stay high.

For now, they're also one of the few manufacturers without a gas/electric hybrid in the lineup, although a 300 Hybrid is rumored to be coming.

If any one company out there knows survival, though, it's Chrysler. I wouldn't count them out yet, but I do hope that the margins are high enough on the new models to keep them in the black, even if the large car and utility segments shrink.

Thoughts?