Chrysler Makes US Production Cuts

21 September 2006

DETROIT: US automaker Chrysler Group is now languishing in the same doldrums currently troubling rivals General Motors and Ford Motor Company.

The US arm of German-headquartered Daimler-Chrysler has been unable to overcome the obstacles posed by rising fuel prices, slowing demands for gas-guzzling cars and trucks, plus rising healthcare costs for its unionized workers.

Worldwide ceo Dieter Zetsche has warned the company will slash production by 16% in the second half of this year, a deeper cut than previously forecast. Poor summer sales means there is a glut of vehicles on dealer forecourts.

The firm has warned the cuts could result in temporary plant closures, but remains coy about those likely to be affected. Of a total of 14 North American manufacturing facilities, Chrysler presently has three plants offline in the US and another in Mexico.

Zetsche has also hinted there may be further restructuring of the business after this summer's lackluster initiatives failed to shift inventory [WARC News: 17-Aug-06].

The production cuts could make Chrysler number four in market share this year in the US after Toyota. The Japanese giant is ramping up production of increasingly popular fuel-efficient models.

The gloom follows a warning in July that Chrysler would post a loss of as much as $600 million [€473m: £318.5m) in the third quarter. Last week, it raised the estimate to $1.5 billion.

Data sourced from Wall Street Journal Online; additional content by WARC staff