SAN JOSE, Calif. – Jim Press, a Toyota lifer and one of the people most responsible for that brand’s U.S. success, stunned the auto industry by joining Chrysler in 2007. The smallest of the Big Three, Chrysler had just become an independent company after Cerberus Capital Management bought 80 percent of it, ending the unsuccessful German-American hybrid known as DaimlerChrysler.

Press’ arrival coincided with the worst sales period for General Motors, Ford and Chrysler in a decade and a half. All three U.S. automakers relied heavily on the profits from big pickups and SUVs, segments deserted by buyers when gas prices reached $4 a gallon. Overall, U.S. car and truck sales are down 11 percent this year. At Chrysler, which also includes the Dodge and Jeep brands, sales are down 24 percent for the year.

Press, the company president, talked about Chrysler’s alternative-fuel plans, why the Big Three need government loans and the state of the company.

The Prius is one of the most popular vehicles … and GM continues to spend millions to advertise its Volt, a plug-in hybrid due in 2010. What are Chrysler’s plans for alternative-fuel vehicles?

We’ve chosen to enter the hybrid market with a more effective product, the (Dodge) Durango and (Chrysler) Aspen SUVs. If you look at the footprint of a conventionally powered Corolla vs. a conventionally powered Aspen, obviously the Aspen has a much greater carbon footprint so the advantages of savings of oil, savings of cost and global-warming issues are captured to a greater degree with the Aspen than with the Prius.

We’ve applied a two-mode hybrid system combined with a Hemi engine that has the multiple-displacement system (which cuts off unneeded cylinders). So you end up with a four-cylinder drive system in a seven-passenger SUV. You get a 40 percent savings in gas overall, and 20 percent on the highway. A car like the Prius doesn’t help you much on the highway. We have a different approach that is more reflective of the typical American driving pattern. The Prius is more reflective of the typical Tokyo driving pattern, which is stop-and-go traffic.

We will have a hybrid version of the pickup truck in 2010 as well as a diesel in 2009. Diesel is part of our strategy for CO issues as well as mileage. The other thing we’re doing is to pull the maximum mileage out of existing power trains. That means going to the drawing board on drag, on rolling resistance and on improving fuel economy and output from smaller displacement engines. We have about nine models in ’09 where we’ll be increasing our gas mileage by one or two miles per gallon.

Those are all steps today that will build the bridge until we start electrifying vehicles.

The Big Three are pursuing eight loan guarantees for $50 billion to retool plants to build more fuel-efficient cars. Both presidential candidates, perhaps to win Michigan, have approved of the notion. Why are they so important?

It’s not for GM, Ford and Chrysler. It’s in the interest of advancing and accelerating the delivery of technology into the customer’s hands at an affordable level so that we can tackle the issues of dependence on foreign oil and CO emissions. It’s also about doing it in the United States instead of importing it. There’s no question that other countries have a head start on advanced power train systems and, in particular, batteries.

The loan guarantee is not our request. It is a provision included in the energy bill that was passed last year … to help defray the cost of converting production facilities in the United States – by any company that produces here, including suppliers and vendors – that will contribute to vehicles that will get at least 125 percent better mileage than the vehicle it replaces.

Where is Chrysler headed?

Chrysler had been run as the subsidiary of a large, global industrial company. It didn’t clearly see its mission in the United States, and they were trying to grow it to become a major volume player. What we see now is that the company doesn’t have to chase volume for vanity.

We have to create a profit for sanity. We need to focus on a business model that’s sustainable going forward. The best way for us to do that is to focus on the markets that we know best. The Chrysler heritage is engineering steeped in workmanship, and an emotional, visceral bond between the driver and the vehicle.

The new Ram, when you drive it, it’s not just an appliance to get from here to there. It sounds right. It has power. It has a very distinctive ride quality. The Challenger is a good example. The 300 is a great styling statement that doesn’t look like anything else on the road.

The old story is that if you want to see who a person is, you see where they live. If you want to see what they want to be, you see what they drive. It really describes what Chrysler can do. We want to build cars and trucks that are emotionally involving and rewarding, with high design, a great feel and a very high level craftsmanship and quality. We want to become the best car company in America. Not the biggest.