DaimlerChrysler's Mercedes-Benz unit plans to cut production at its biggest German plant due to the tough market, according to a workers' magazine obtained by Reuters on Wednesday.

Citing the September edition of the Brennpunkt magazine, Reuters reported that the factory's management told the workers council at Mercedes' Sindelfingen plant that changed market conditions would force lower production levels and that would have an impact on some workers with short-term contracts.

"The Sindelfingen production programme for the current year has been significantly reduced from July 2002's plan," the magazine reportedly said, adding: "Current expectations for 2004 assume a lower number of units than originally planned... the staffing requirements at the Sindelfingen production (site) will be lowered accordingly."

According to Reuters, Brennpunkt did not put a number on the production plans but said that talks with the company aimed at finding a sensible solution were in progress. DaimlerChrysler declined to comment, the news agency added.

Reuters said the Sindelfingen plant, outside Stuttgart in southern Germany, is Mercedes' biggest plant with 33,373 employees and builds C-Class and E-Class models, key to Mercedes' profits. The worker's council declined to tell the news agency how many cars the plant makes. Reuters noted that the luxury Mercedes division, the earnings driver for DaimlerChrysler as the company's US Chrysler arm struggles to make money, expects flat earnings this year.

Reuters said Mercedes-Benz, like other car makers, has been hit by falling demand for cars in Europe in the last year as sales of its M-B brand cars have fallen about 2% so far this year while arch rival BMW has sold 4.4% fewer cars of its core brand.

Reuters said new car sales in Europe are expected to pick up about 2.5% next year, according to company and analyst forecasts, after a roughly 3% fall this year.

However, Reuters noted, Mercedes said this month it expects flat sales next year as well as this year, though it has also said that, by 2005, new A-Class and M-Class variants will improve volumes significantly.