Chrysler Cuts Investment by 40%

18 June 2001

Cash-haemorrhaging automaker Chrysler, the US division of German-headquartered DaimlerChrysler, has announced it is to slash around $18 billion (E20.8bn) from capital expenditure over the next five years.

The cuts, nearly 40% of the total, will reduce the car giant’s annual investment from around $9.5bn to $6bn. Chrysler president Dieter Zetsche declared that it could not continue to spend around 10% of sales on investment when rivals are spending only 5%–6%.

“The basic idea is clearly to reduce the level of spending, but it doesn’t mean we will postpone anything of substance on the product side,” continued Zetsche, insisting that the cuts would not adversely affect product launches.

“It means we must be as efficient as possible in spending. You look at everything twice to see if it adds value. If it doesn’t, you just don’t spend it.”

The savings will be made through cuts in product development, plants and tooling, as well as more intensive plant use, greater component sharing between marques and competitive tendering for plants. Chrysler made a loss of $3.9bn in the first quarter on sales of $12bn.

News source: Financial Times