Zetsche: New tune

Frankfurt, Jan. 24 (Reuters): DaimlerChrysler will cut up to a fifth of its white-collar staff over the next three years, chopping around 6,000 jobs to boost efficiency, the world’s fifth-biggest carmaker said on Tuesday.

The global programme ? the first major strategic step by new chief executive Dieter Zetsche ? will cost around 2 billion euros ($2.5 billion) by the end of 2008 but should reap substantial savings and make management much leaner.

“Together with other ongoing efficiency programmes ... G&A (general and administrative) costs are expected to be reduced by 1.5 billion euros per year. The net effect of today’s announcement will be (a saving of) 1 billion euros per year,” the company said in a statement.

DaimlerChrysler stock extended gains on the news, rising 4.7 per cent to 44.67 euros to lead gainers in the DJ Stoxx European car sector index.

Investment bank Morgan Stanley called the steps “a prerequisite for cultural change” at DaimlerChrysler, which it rates “overweight” with a 48-euro price target.

“(The) payback is much better than typical investments, the company has the balance sheet to execute the reductions without threatening the dividend or the credit profile of the group. We estimate DCX will end 2005 with roughly 6 billion euros of net cash on the balance sheet,” the bank said in a note to clients.

“The job cuts are bigger than expected,” one stock trader in Frankfurt said.

DaimlerChrysler said the steps would eliminate roughly 20 per cent of G&A staff and 30 per cent at management levels.

Zetsche cut 40,000 jobs when he headed Chrysler.