DaimlerChrysler to Revamp Truck Unit

DaimlerChrysler AG, the world's largest truck maker, said it would reorganize its truck division to cut costs by sharing components among its U.S., European and Asian units, news services reported.

Daimler plans to use standardized engines, transmissions and axles at Mercedes-Benz in Germany and Freightliner business in the United States, as well as at Mitsubishi Fuso and Hyundai, Bloomberg reported. DaimlerChrysler owns 43% of Fuso and half of the Hyundai truck division.

This plan would cut material costs by about two-thirds, the company said.

The reorganization is schedule to take place as of Jan. 1, 2004. Daimler truck unit had an operating loss of $392 million last year due to one-time costs from job cuts and shutting plants.

The company planned to break up its Powersystems engines and parts business formed in 2001 after Daimler took over engine maker Detroit Diesel, Dow Jones reported.

In addition, Daimler said it would create a new steering committee, led by commercial-vehicles chief Eckhard Cordes, which will coordinate sharing of engines, axles and other major components by the truck units, Dow Jones said.

Daimler expects annual savings of “hundreds of millions” of dollars when it begins to cut spending within five to 10 years, Bloomberg said. The company said savings would really be noticeable when it begins developing the next version of its vehicles.

Although it previously said it does not plan to build identical trucks worldwide, it is considering developing a truck that may be sold in all markets, helping them save money through economies of scale, Bloomberg said.

Engines, electronics and drive trains account for between 50% and 70% of the cost of a truck.

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