Savings will account for most of Chrysler#;s $US5.4 billion cost-cutting target this year, The Financial Times said, citing company president Dieter Zetsche.

Zetsche told the newspaper that Chrysler had set higher targets for material cost reductions and even higher goals for manufacturing and fixed costs.

Of the 26,000 job cuts planned under Chrysler#;s restructuring, 20,500 employees had already gone, mostly in the US, with 3,500 more planned this year and the rest in 2003, the FT said.

The newspaper added that Chrysler beat its $3.1 billion cost-cut goal last year by $200,000 million with no help from sales growth.

The FT said that Chrysler sales were down 10.3 percent in the first two months of this year and that market share, though slightly improved from 13.2 to 13.4 percent, was still below last year#;s goal of 14-14.5 percent.

Zetsche told the FT that he blamed industry-wide weak sales on General Motors#; discounting which had raised incentives from $1,600 to $3,000 a vehicle over the last year.

“I don’t think this is a strategy that anyone can benefit from,” Zetsche told the newspaper. “We will stay at the back of the [discounting] pack but we’re not able to ignore what’s going on.”