Struggling luxury car maker Mercedes is aiming to cut up to 8,500 jobs at its German plants.

Parent company DaimlerChrysler will spend €950 million ($1.14bn; £647m) through the next twelve months to finance the voluntary layoffs, which are "unavoidable given the current market situations", says human resources chief Günther Fleig.

The Stuttgart-headquartered Mercedes group, which also owns the Smart and Maybach marques, suffered an operating loss of €954m in the first quarter of 2005 and barely eked a profit of €12m in the second.

Despite the cost of the job cuts program, the group remains upbeat in its full-year forecast, saying it still expects operating profit to increase slightly from the €5.8 billion posted in 2004.

The company, which employs around 94,000 people in Germany, has struggled with build-quality problems and fierce competition, together with big losses at Smart. Earlier this year Mercedes announced a recall of 1.3m cars for a variety of mechanical problems.

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