Despite high US petrol prices, DaimlerChrysler’s Chrysler division reportedly said demand for its muscular Hemi V8 engines was outstripping supply.

“What we see is a tremendous shortage of our Hemis,” Chrysler president and chief executive Dieter Zetsche told Reuters. “It’s a great problem to have,” he added, saying Chrysler had underestimated demand for the big 5.7 litre engine, which is available in Dodge pickups and sport utility vehicles as well as the recently introduced Chrysler 300C sedan and Dodge Magnum sport wagon.

Zetsche reportedly spoke on the sidelines of celebrations at two Detroit-area assembly plants, as Chrysler launched production of an all-new 2005 Jeep Grand Cherokee sport utility vehicle and a Dodge Dakota pickup truck.

Reuters noted that the 5.7 litre Hemi will be offered as a option on the new Grand Cherokee, which goes on sale next month, while Chrysler is also building an even more powerful 6.1 litre version of the popular engine.

The news agency said the fuel economy of the Hemis is far from great – the 6.1 litre engine featured on a high performance version of the 300C gets about 14 miles per gallon in city driving and 19 mpg on the highway – but they hark back to Detroit’s muscle car days of the 1960s and 70s, when horsepower was king, and have clearly resonated with consumers.

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To meet demand for the Hemis, Frank Ewasyshyn, Chrysler’s head of manufacturing, told Reuters, the company was looking at expanding capacity at the plant in Saltillo, Mexico, where it builds the engines.

“We can expand the capacity of the current site,” Ewasyshyn said of the Mexican plant, which builds about 460,000 engines a year, including roughly 368,000 Hemis. “We’re still discussing our ability to respond to the market.”

Reuters said that, like its crosstown rivals General Motors and Ford, Chrysler makes most of its automotive profits from sales of pickups and SUVs.

In his remarks to reporters, Zetsche said he had seen “no impact of higher fuel prices whatsoever” on sales of the fuel-thirsty vehicles, the report added.