Trying to turn around its struggling Smart car division, DaimlerChrysler is to slash costs and at least 700 jobs. With the major restructuring programme, the German car maker insists that Smart will reach break-even point by 2007. The majority of the job losses will be at the Boeblingen factory in Germany and around 100 at the French plant in Hambach.
Launched in 1998, the original two-seater Smart urban runabout received good reviews, but has never hit its sales targets or made a profit. The restructuring will include scrapping the Smart Roadster and cancelling plans for a all-wheel-drive off-road vehicle. It will cost 1.2 billion euros and further drag down profits at DaimlerChrysler. The company says it expects a slightly higher operating profit this year, but only when the cost of the Smart reorganisation is excluded. Daimler Chrysler’s chief executive, Jurgen Schremp, has other problems too with the recall of 1.3 million Mercedes cars, including the E-Class saloon and the brand-new CLS coupe. That is to tackle persistent electronics problems that have undermined Mercedes reputation for reliability in recent years. It is the company’s biggest ever recall and one financial analyst specialising in the car industry said he beleives it will cost Daimler Chrysler hundreds of millions of euros.