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.
Reuters 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.
