Update 3-chrysler Recalls Suvs After Dozens of Reported Fires

(Adds detail on vehicle fires, recasts first paragraph, adds background on Avenger) By Kevin Krolicki DETROIT, March 9 (Reuters) - Chrysler Group said on Friday it would recall almost half a million vehicles, including recent models of the Jeep Liberty and Dodge Durango after reported fires and its new Dodge Avenger sedan because of faulty door latches.

Chrysler said it took the action after receiving reports of dozens of cases in which the Durango or the Liberty caught fire.

The sweeping recall of over 489,000 vehicles was the second such action by Chrysler in two weeks. In late February, the U.S. automaker recalled almost 51,000 vehicles to reprogram software for anti-lock brakes.

The National Highway Traffic Safety Administration had opened safety investigations into the reported problems with both Chrysler-made sport utility vehicles last year.

In two cases, Jeep Liberty drivers reported suffering minor burns resulting from fires triggered by a problem with the blower motor in the vehicle's air-conditioning system, a Chrysler spokeswoman said.

There were no injuries reported as a result of the Durango fires, and no accidents had been reported as a result of the defects in either of the vehicles, Chrysler said.

Chrysler, the struggling U.S. arm of DaimlerChrysler AG DCXGn.DE DCX.N, said it was recalling 328,424 of its slow-selling Durango SUVs because of the risk of overheating linked to an integrated circuit in the instrument cluster of the vehicles. The recall covers 2004 to 2006 model year SUVs.

Chrysler, which faces a possible sale by its German parent company, also said it would service up to 149,605 Jeep Liberty vehicles because of a problem with the blower motor in the air-conditioning system. Chrysler said in some cases the motors could fail, particularly in hot weather.

That recall affects 2006 and 2007 model-year Jeep Liberty vehicles.

Chrysler had received reports of 12 fires involving the Liberty and 66 fires for the Durango, Chrysler spokeswoman Kristin Tyll said.

In a third move, the automaker also said it was recalling 10,994 of its recently released 2008 model Dodge Avenger sedans because of a problem with the door latches.

Chrysler, now the No. 4 U.S. automaker in sales, began making the Avenger at its Sterling Heights, Michigan, assembly plant last month.

Chrysler said it would notify affected owners in all three cases. Notices to Durango owners will go out in April, while owners of the Liberty will be notified in May, it said.

Chrysler said it would notify owners of the Avenger once it had a sufficient quantity of replacement parts for the vehicles.

In addition to the direct expense involved in a vehicle recall, the safety actions can also be damaging to a brand's longer-term reputation.

In recent years, Chrysler has undertaken a stepped-up investment in vehicle quality that executives have said they expect to see reflected in improved future quality ratings.

Chrysler, which lost $1.48 billion last year as sales slumped, is cutting 13,000 jobs in an attempt to return to profitability by 2008.

A number of potential bidders, including private equity firms and General Motors Corp.( GM.N ), have expressed an interest in acquiring the automaker after Daimler said last month it was keeping all options open for the unit.

Taken together, the Chrysler recalls affected more vehicles than any such action by a single automaker since Toyota Motor Corp. ( 7203.T ) recalled over 550,000 Tundra pickup trucks and Sequoia SUVs in January.

"Obviously we would prefer not to do this, but we feel this is an important part of our business," said Chrysler spokesman Max Gates. "So we do this when we have to." Gates also said consumers needed to look at more than a few months of recall data to get an accurate sense of how brands were performing. "I think it's important not to read too much into the short term," he told Reuters.

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