Chrysler To Cut Production 47%

DaimlerChrysler said Sept. 19 it would reduce production by Chrysler, its struggling U.S. subsidiary, by 47% in the second half of the year.

From July to December, 705,000 Chrysler vehicles, which include the Chrysler, Jeep and Dodge brands, will be delivered to dealerships, the head of DaimlerChrysler Dieter Zetsche told analysts. This figure was a downward revision of a previous forecast of 840,000 vehicles and 47% less than the near 1.33 million vehicles delivered in the same period of last year.

Zetsche said that the reduced production was intended to relieve a backlog of vehicles at dealerships. He said that poor sales were because the Chrysler range was poorly adapted to current market demand, which was for fuel-efficient models rather than four-wheel-drives and vans.

DaimlerChrysler had issued a profit warning on Sept. 15 because of anticipated losses at Chrysler, sending shares of the group into a tailspin. "The Chrysler Group is facing a difficult market environment in the U.S. with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles," DaimlerChrysler had explained in its statement.

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