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Jobs cuts at Smart

Smart has announced that ‘significant workforce reductions’ will be part of its new business model as well as the end of the Roadster and plans for an SUV.

The business model is to “put the brand onto a financially sound basis”, with the goal of breaking even for 2007, the company said today.

The struggling small-car maker has had to re-access its situation after head of Mercedes Car Group, Eckhard Cordes, had described the Smart brand as a ‘disaster’.

Smart aims to achieve the job cuts in a ‘socially acceptable’ manner and talks are planned with the works council on the issue in the coming weeks.

The development of the successor to the fortwo will be evaluated, including fulfilling the requirements for the US market.

Co-operation with Mitsubishi Motors on the forfour will be continued.

The production of the Roadster will be terminated at the end of 2005 and the SUV project will be discontinued.

Earnings are to be increased by €600m (£412m) in the year 2007. Smart has said it will be possible to reduce fixed costs by around 30% within the next two years, while substantially improving productivity.

The new business model also includes an organisational change. Key tasks in development, sales, procurement, aftersales and service will be integrated into the respective areas of Mercedes-Benz Passenger Cars.

To boost unit sales, the number of Smart outlets in the Mercedes-Benz sales organization will be increased by approximately 25%.

DaimlerChrysler says the restructuring expenses incurred in 2005 will total up to €1.2bn (£0.82bn).

This figure includes exceptional write-downs on plant and equipment, the settlement of obligations to third parties, and other value adjustments.

Rainer Schmueckle has been appointed as the chief operating officer as of April 15 to oversee all the cost cutting changes.

The business model will be further developed in detail in the coming weeks and will be submitted to DaimlerChrysler’s board for a decision at the end of April.

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