German-American automaker DaimlerChrysler AG said Wednesday it will cut 8,500 jobs at its Mercedes Car Group in a bid to return the troubled brand to profitability.
The company said the cuts, which will take place in Germany, will come through voluntary termination agreements over the next 12 months and result in charges of Ђ950 million (US$1.11 billion).
The announcement from the company's headquarters in Stuttgart came after Dieter Zetsche, who took control of Mercedes this month and is set to become chief executive of DaimlerChrysler at the beginning of 2006, outlined the plan to the company's supervisory board in the United States earlier in the day.
Rumors of the cuts had pushed shares of DaimlerChrysler up nearly 3 percent to Ђ45.21 (US$54.27) in Frankfurt trading Wednesday.
The Mercedes division was once the pride of DaimlerChrysler, and industry watchers are keen to see if Zetsche can invigorate it the way he did Chrysler, which posted its eighth straight quarterly operating profit in July.
The Mercedes group has struggled this year, facing a 1.3-million car recall amid quality problems and owner dissatisfaction. The company had already said it was looking at some Ђ1.2 billion (US$1.4 billion) in restructuring costs this year.