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Chrysler to slash spending
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June 18, 2001: 3:56 a.m. ET
Report: U.S. unit of DaimlerChrysler to cut spending by 40% over 5 years
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LONDON (CNN) - U.S. auto maker Chrysler plans to cut spending by almost 40 percent, or $18 billion, over the next five years, a report said on Monday.
The move by the U.S. unit of Germany's Daimler-Chrysler is expected to reduce its average investment budget from $9.5 billion to about $6 billion a year, the Financial Times reported, citing unpublished company figures.
Dieter Zetsche, Chrysler's German president, declined to comment on the spending targets at the U.S. arm, which is currently undergoing a major restructuring, the FT said.
DaimlerChrysler (DCX) reported a $3.9 billion operating loss for Chrysler on sales of $12 billion in the first quarter of 2001.
The U.S. auto maker is now seeking cost cuts through more competitive tendering, more component sharing between marques and better plant use.
A key to its restructuring plan is the elimination of about 26,000 jobs at Chrysler and another 9,600 jobs at Mitsubishi.
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Zetsche told the FT the group could no longer justify an investment programme equivalent to 10 per cent of sales compared with 5-6 per cent at its competitors.
Zetsche insisted the cuts would not compromise product launches in the U.S., the report said.
"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," he said.
Chrysler, which had earmarked $48 billion for capital expenditure between 2000-2004, has cut spending on product development, plant and tooling to $36 billion for 2000-2005 and $30 billion for 2002-2006., the report said.
It is understood that the figures could be reduced further before the end of this year, according to the FT. 
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