Dodge’s upcoming 2007 Caliber, the replacement for the aging Neon, will be powered by DaimlerChrysler’s newly-developed four-cylinder engine family.

On the Caliber, the new engines will be mated to a continuously variable transmission and an electronic all-wheel drive system.

Engine choices for the U.S. market will include: a 1.8-liter rated at 140 hp, a 2.0-liter producing 150 hp and the top-of-the-line 2.4-liter generating 170 hp. A 2.0-liter turbodiesel has also been developed, but it will not initially be available for the U.S. The result of a joint venture between DCX, Hyundai and Mitsubishi, the engines feature dual variable valve timing and are more fuel efficient, the automaker says.

All displacement options will be available for the Caliber and will also power other next-generation DCX vehicles. Turbocharged variants are rumored to be in development.

In addition to the new engines, an all-new continuously variable transmission, dubbed CVT2, will shift the Caliber. The CVT will offer an autostick option which will allow drivers to manually select the six simulated gears. DCX says the new transmission will help improve Caliber’s performance (especially in the 30-60 mph area) and fuel economy over a traditional automatic.

The CVT will transmit the power to an electronic all-wheel drive system. The system drives the front wheels unless it determines the rear wheels need grip. Then the torque output will vary automatically based on traction conditions via an electronically controlled coupling. The system is fully active from 25-65 mph to help ensure optimum handling.