Chrysler Group to Try to Shave $1000 From Production Costs

Date 2006/10/21 16:33:04 | Topic: Miscellaneous

We just ran across this article on iWon.com about how Chrysler Group is aiming to shave an average of $1,000 off the production costs of each of their vehicles. They're bringing in a couple of cost-cutters from the Mercedes division to help figure out how exactly they're going to do this.

Here's a snippet:
As part of that effort, Chrysler is trying to reduce the cost of producing new and existing vehicles by $1,000 per unit on average, Vines said. That savings is easier to achieve on larger vehicles, but far more difficult on smaller vehicles with lower sticker prices, he added.

If Chrysler had achieved the target over the first nine months of the year, it would mean a cost savings of $1.8 billion based on sales figures.

Dresdner Kleinwort said the full-year value of the cost- cutting would be near $2.8 billion, but questioned whether the goal was achievable.

"It appears hard to see how Chrysler could slash costs by another $2.8 billion without cutting too deep," the brokerage said in a note for clients. "We anticipate significant capacity reductions."

Chrysler has said health care costs for its U.S. work force amount to $1,400 per vehicle and the company has so far failed to win a cost-cutting concession on health care from the UAW of the type the union granted to its larger rivals General Motors Corp. and Ford Motor Co.

It appears that consumers won't be seeing any of those cost savings, they're aimed at getting Chrysler Group back in the black.


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