Management at DaimlerChrysler’s loss-making Smart unit has reached an agreement with its works council over 300 job cuts in Germany, Smart reportedly said on Wednesday.
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“The necessary personnel measures begin on 1 July and should be completed by the end of this year,” Smart said in a statement cited by the Reuters news agency, reaffirming it expected to be able to post a profit in 2007.
The report noted that the cuts follow a board decision late in March to scrap the four-seat Smart Forfour model and focus on its original cult two-seater Fortwo, in yet another overhaul of the troubled minicar unit that will this time cost DC around EUR1bn ($US1.2bn).
Reuters said sales of the Forfour fell by a quarter last year to just 43,700 units in a cut-throat market segment and DC hopes that dropping it will help premium division Mercedes Car Group hit its target of a 7% operating margin next year, a goal chief executive Dieter Zetsche has staked his reputation on meeting.
The report added that, a year ago, Smart dropped its roadster model and abandoned plans for a Brazilian-built Smart offroader. It also cut around 700 jobs last year, when restructuring charges of EUR1.1bn dragged Mercedes Car Group to an annual loss of EUR505m.
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By GlobalDataReuters noted that company officials have said Smart narrowed its operating loss in 2005 from a deficit of around EUR600m euros in 2004.
Analysts reportedly estimate Smart lost around EUR400m last year, due mainly to the slow-selling four-seat model.
