Chrysler's plans to cut its US production by nearly half will not likely result in any permanent plant closures or layoffs, Chrysler Group chief executive Tom LaSorda said on Tuesday.
"It's too premature to talk about closings," LaSorda said during a conference call with analysts and journalists.
LaSorda said the company was taking a look at all aspects of the company's operations but that it expects sales to improve in the fourth quarter and next year.
"We're going to grow on the segments where we're not very strong. Our aim is to make more money on the products coming soon," he said.
DaimlerChrysler chief Dieter Zetsche told analysts on Tuesday that production at its struggling US subsidiary would be cut by 47 percent in the second half of the year to 705,000 vehicles.
Zetsche said that the reduced production was intended to relieve a backlog of vehicles at Chrylser dealerships.
He attributed Chrylser's poor sales to a product range poorly adapted to current market demand, which in the context of surging gasoline prices has swung to fuel-efficient models rather than sports utility vehicles (SUVs) and vans.
DaimlerChrysler issued a profit warning last Friday because of anticipated losses at Chrysler, sending shares of the group into a tailspin.
The projected US$1.5 billion loss makes efforts to win health-care concessions from the United Auto Workers (UAW) union even more important, LaSorda said.
"We cannot sit back and take an uncompetitive situation," LaSorda said.
General Motors and Ford Motor Co were able to win health care concessions and to hold back a US$1 per hour raise for their unionized workforce. But Chrysler workers rejected the deal and received their raise on Monday.
"We need to continue the dialogue with UAW and make sure we'll address these issues collectively," LaSorda said.
LaSorda said Chrysler was responding to shifting consumer demands by focusing more on smaller vehicles.
"We have a lot of four-cylinder products coming," he said. "The timing for these products is right. I wish they were here a year ago."
A new study released this week by the University of Michigan said US carmakers could win back customers if they boost the fuel-economy of their vehicles.
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