REFILE-Chrysler readies ads for key crossover, brand

(Refiles to fix typo in headline)

By David Bailey

DETROIT, April 7 (Reuters) - Chrysler LLC on Tuesday will roll out a marketing campaign it hopes will help its new Dodge Journey crossover wagon gain a foothold in the fastest-growing segment of the struggling U.S. auto market.

Chrysler posted slow initial sales for the Journey in its first few months, and production is likely to be far below company expectations for 2008, said Erich Merkle, director of forecasting for consulting firm IRN Inc.

Dodge hopes a marketing campaign aimed at young adults and empty-nesters will drive Journey sales in a segment that has fierce competition from Toyota Motor Co (7203.T), General Motors Corp GM.N, Ford Motor Co (F.N), Hyundai Motor Co (005380.KS) and others.

"Journey is very significant for us," Chrysler Chief Marketing Officer Deborah Meyer told reporters. "The crossover segment is one of the bright spots in the market today."

Last year, Chrysler announced plans to scrap its Pacifica, the only other crossover vehicle in its line-up, part of a move to cut costs in response to the declining market.

Meyer said Chrysler expects average transaction prices for the Journey of $23,000 to $24,000. It retails from $19,985 for a four-cylinder to more than $30,000 for a six-cylinder loaded with options.

Chrysler, which has sped up a restructuring since Cerberus Capital Management [CBS.UL] bought 80 percent of the No. 3 U.S. automaker last year, also plans to "re-engage" customers with a broad corporate campaign.

With the slogan "If you can dream it, we can build it," ads will emphasize quality improvements and how Chrysler is listening more closely to customers after being criticized for ramping up inventories of slow-selling vehicles under former owner Daimler AG (DAIGn.DE).

The company lost $1.6 billion in 2007 and U.S. sales fell about 3 percent to just over 2 million vehicles.

The Dodge brand has increased the share of its spending on Internet advertising to about 29 percent overall for the Journey campaign, making the campaign its biggest-single Web advertising effort to date.

Chrysler, a major U.S. advertiser like rival automakers, would not disclose the amount it will spend on marketing.

Dodge sold 2,640 Journey crossovers in March without the benefit of the ad campaign, which includes homepage "takeovers" where Web ads splash across a full computer screen.

"The initial response to the Journey has been less than favorable," IRN's Merkle said, describing the 2,640 sales reported in March as "somewhat appalling."

Merkle estimated February production of 10,000 units, the most recent figures available. He said March production of the Journey was likely to be similar, leaving Chrysler with more than enough inventory.

He expects 2008 production of 70,000 to 75,000 for the Journey, including vehicles destined for overseas, far below the 120,000 he estimates Chrysler can produce. The crossover is assembled in Toluca, Mexico.

Merkle said, broadly speaking, Chrysler quality has improved gradually, the Dodge Ram pickup truck is likely to maintain market share and the carmaker's market-leading minivans hold potential, but Chrysler faces a new dearth of new offerings next year.

"If the U.S. economy improves in 2009, they are not going to benefit because they don't have the new product hitting the shelf in 2009," Merkle said. (Editing by Braden Reddall)