Slashing Deliveries

Sarah Karush | THE ASSOCIATED PRESS |

DETROIT — Faced with vehicles languishing on U.S. dealer lots, Daimler-­Chrysler AG said Tuesday it will slash retail deliveries by nearly 24 percent in the third quarter.

The lineup of subsidiary Chrysler Group has been bogged down by gas guzzlers and a misplaced faith in summer incentives. The move follows the lead of Ford Motor Co. and General Motors Corp., which previously announced production cuts in response to slow sales.

Chrysler is cutting retail shipments in the quarter that ends Sept. 30 by 90,000 vehicles to 290,000 vehicles. It had originally planned to ship 380,000.

The company plans to knock another 45,000 units off its schedule in the fourth quarter. For the entire second half of the year, retail shipments will be cut by 16 percent to 705,000 vehicles from the previous target of 840,000, Chrysler said. The cuts mean some plants will see temporary shutdowns between now and the end of the year. Chrysler officials said mostly truck plants would be affected, but they declined to pinpoint exactly which plants.

"Our goal here is to keep our dealers -- get them back -- into a more competitive inventory level, so we can be ready for the second-half new-product introductions," Chrysler Group Chief Executive Tom LaSorda said.

The company, which releases production schedules on a weeklybasis, currently has three plants in the U.S. and one in Mexico off line, out of a total of 14 North American plants.

Among the four plants idled this week is the South assembly plant in Fenton, where roughly 3,300 people build minivans. The others include a Jeep plant in Detroit; a Warren plant that produces the Dodge Ram and Dodge Dakota; and a plant in Saltillo, Mexico, that also makes the Dodge Ram, Chrysler spokeswoman Michele Tinson said.

The announcement came four days after Stuttgart, Germany-based DaimlerChrysler projected Chrysler's third-quarter loss would be $1.52 billion -- more than twice what it had previously anticipated.

Executives said there were no immediate plans to slash jobs or close plants permanently as Ford and GM have done recently, but they didn't rule anything out.

"We're going to turn over all the rocks and determine where the cost structure sits and do things that are right from a financial prudence perspective," LaSorda told reporters during a conference call.

DaimlerChrysler Chairman Dieter Zetsche said the company was forced to act after dismal sales this summer. Chrysler was counting on an employee-pricing promotion to drive sales after such promotions fueled record-breaking sales for the industry last year.

But Zetsche said this year's zero-percent financing offers from Ford and GM ended up being more successful.

GM and Ford also recently announced steps to trim inventories. GM said earlier this month that it expects third-quarter production to drop 8 percent from the same period last year and fourth-quarter production to decline 12 percent. Ford said in August that it would temporarily halt production at 10 plants between then and the end of the year, pushing full-year production down 9 percent from last year.

Chrysler gave its numbers in terms of retail shipments, rather than production, but LaSorda said the numbers roughly correspond.

Biggest Losers

Chrysler light trucks

experiencing sharp sales volume

decline during August

Dodge Durango ""34%

Jeep Liberty ""29%

Dodge Grand Caravan

and Caravan minivans* ""21%

Jeep Grand Cherokee ""16%

Jeep Wrangler ""15%

Dodge Ram pickups** ""12%

*Built at Fenton and Windsor, Ontario

**Built at Fenton; Warren, Mich. and Saltillo, Mexico