German execs help Chrysler group look for cost cuts

DETROIT -- The Chrysler group is scouring the company to cut costs -- on the order of $1,000 for every vehicle it builds.

Several executives from DaimlerChrysler in Germany -- including Mercedes-Benz COO Rainer Schmueckle -- are making regular trips to the automaker's headquarters in suburban Detroit to help. But Chrysler group CEO Tom LaSorda is still in charge, a Chrysler spokesman says.

Every part of the company is being looked at for cost savings, Chrysler group spokesman Jason Vines said today. That includes vehicle development, manufacturing, purchasing and marketing.

The cost-cutting teams are expected to deliver their findings by early next year at the latest, Vines said.

"In a global enterprise, you are always looking for the best and brightest ideas to make you more competitive," Vines said.

The cost-cutting effort, named Project Refocus, began in late summer as the Chrysler group grappled with swollen inventories of vehicles and lackluster response to employee-pricing incentives.

The effort was stepped up after it became clear that the Chrysler group would post a large loss for the third quarter. German executives were dispatched to Michigan last month.

Vines said today that LaSorda asked DaimlerChrysler CEO Dieter Zetsche for help from Germany.

DaimlerChrysler warned last month that the Chrysler group would post a loss of about $1.5 billion for the third quarter, breaking a string of 12 profitable quarters. The automaker plans to report its third-quarter financial results next week.

Much of that loss is attributed to the Chrysler group's decision over the past year to keep vehicle production up even as sales slowed. The extra units, known as the "sales bank," have been stored in lots near assembly plants and rented lots in the Detroit area.

The automaker's sales staff has encouraged dealers to order units from the sales bank by offering extra incentives.

Chrysler group executives have said the sales bank will be eliminated by the end of this year. As of Oct. 1, the Chrysler group had 533,200 vehicles in inventory, an 82-day supply at current selling rates.

Schmueckle's history includes several cost-cutting efforts. As head of the Freightliner truck unit from 2001 through 2005, he led a major reorganization.

Working under Zetsche -- who last year took on the job of running the Mercedes Car Group in addition to DaimlerChrysler -- Schmueckle has presided over more than 8,000 jobs cut at Mercedes-Benz.