New large Chrysler car models will use Mercedes-Benz steering systems, axles and transmissions to save money and improve quality, Bloomberg News reported, citing Chrysler president and CEO Dieter Zetsche.

Chrysler's 300M, LH and Concorde and Dodge Intrepid will share some parts with the Mercedes E-Class range, Bloomberg quoted Zetsch as saying.

However, Zetsch wouldn't say when the new Chrysler cars would be introduced, though the company has previously said the shaed transmission would be available for 2004 models.

Analysts interviewed by Bloomberg said that the parts sharing would be the most significant between Mercedes and Chrysler models since the companies merged in 1998.

Mercedes E-Class

The German company needs to reduce costs at Chrysler, which expects to post a $US2.4 billion loss this year.

"At the time of the merger, Mercedes was adamant that never the twain shall meet," Alan Baum, an auto analyst at industry forecasting company Planning Edge told Bloomberg News. "I think finances are now pushing them towards a middle ground."

Bloomberg said that Chrysler produced 292,000 full-size cars last year while Mercedes built around 250,000 E-Class. Prices for the E-class begin at $48,500 in the U.S. while the Chryslers start around $21,000 for the Dodge Intrepid. The revised Chrysler models will be rear-wheel drive like all large Mercedes-Benz sedans.

Chrysler's Concorde

Bloomberg added that DaimlerChrysler officials said at the time of the 1998 merger that they wouldn't jeopardise the Mercedes-Benz brand by sharing major vehicle components with Chrysler.

However, the company has since said that the two divisions would use some common major components to reduce costs and improve the quality of some Chrysler products.

But, Bloomberg noted, the group has stopped short of sharing entire vehicle platforms or engines.

Zetsche agreed with Bloomberg News that there was resistance to using Mercedes parts in Chrysler vehicles. The need to cut costs at the money-losing U.S. unit overrode fears of diluting the Mercedes brand, he added.


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