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Friday June 22, 1:37 AM Chrysler commits to new hybrids, better mileage CHELSEA, Mich., June 21 (Reuters) - Chrysler Group said on Thursday it would roll out new hybrid vehicles, streamline its cars and trucks and introduce more diesel engines in a bid to improve fuel economy in the face of high gas prices and tougher federal regulations. Chrysler, which is being acquired by Cerberus Capital Management in a $7.4 billion deal, has trailed other major, competing automakers in key indicators of fuel economy. "Chrysler Group is focused directly on improving fuel efficiency across our vehicle lineup," product development chief Frank Klegon said in a statement. "We don't think there is one silver bullet. We have to fight these battles on many fronts," he said. Klegon said Chrysler projected that hybrid and diesel alternatives to traditional gasoline engines could grow to represent 30 percent of the U.S. light vehicle market, a roughly tenfold increase from current levels. U.S. automakers have seen their market share eroded in recent years, a trend many analysts and executives attribute in part to the reputation Japanese automakers have established for better fuel economy. Like its rivals, Chrysler is also facing the prospect of tougher federal fuel economy standards under a pending bill in the U.S. Senate that would mandate fleet-wide average of 35 miles per gallon for cars and light trucks by 2020. The current corporate average fuel economy -- or CAFE standard -- is 27.5 miles per gallon for cars and 22.5 for light trucks. Klegon, who was speaking to reporters at the automaker's proving grounds, said Chrysler would introduce a new "mild hybrid" vehicle equipped with a lower-cost battery pack designed to power the vehicle at stops. In addition, Chrysler plans to use hybrid technology developed jointly with General Motors Corp. and BMW AG in vehicles beyond the two hybrid SUVs it had already announced that it would introduce next year. Klegon said that "two mode" hybrid system, which can use an on board electric motor to generate additional power as needed, promised a 25 percent gain in overall fuel economy. Chrysler will also offer a clean-burning diesel version of the Jeep Grand Cherokee designed to meet the tougher emission standards imposed in U.S. states such as California. The technology for reducing nitrogen oxides that will be used in the vehicle was developed by Chrysler's parent, Daimler, which will retain an almost 20 percent stake in the automaker. Klegon said Chrysler was considering offering a four- cylinder diesel engine in the U.S. market, a common passenger car engine configuration in Europe that could offer fuel economy gains of up to 30 percent over gasoline engines. Chrysler, now the fourth-largest automaker in the U.S. market, relies on sales of trucks and SUVs, such as the Dodge Durango SUV and RAM pickup truck, for almost 70 percent of its total sales at a time when U.S. consumers are increasingly demanding lighter and more fuel-efficient vehicles. Chrysler, which does not expect to return to profitability until 2008, has lagged other automakers in rolling out hybrid vehicles. Hybrid versions of the Durango and Chrysler Aspen SUVs are not due in showrooms until next year. The automaker is investing $3 billion in new plants in Wisconsin, Michigan, Indiana and Mexico intended to produce a family of more fuel-efficient V-6 engines and components. Chrysler said the family of "Phoenix" engines, which will be available for 2010 models, would produce fuel efficiency gains of between 6 percent and 8 percent. By reducing vehicle weight and improving aerodynamics, Chrysler also expects to boost its fleet-wide fuel economy at least another 5 percent.