Chrysler Hikes Its Cost-Cutting Target by $1 Billion a Year

Chrysler Corp., struggling with sagging sales and high incentive costs, has increased its target for a cost-cutting program to $2.5 billion.

In July, 1989, Chairman Lee A. Iacocca announced plans to trim $1 billion from the auto maker’s $26-billion yearly budget by the end of 1990. Chrysler has cut about 2,500 of its 28,700 white-collar jobs since last October, spokesman Steve Harris said Tuesday.

Since the cost-cutting plans were announced, executives have raised the target twice, first to $1.5 billion by the end of this year, and now to $2.5 billion by next June, Iacocca said in an interview with the Wall Street Journal.

“Some tentative targets ware being talked about,” Harris said. “We haven’t formalized that yet or put the program in place. That is a tentative target that he (Iacocca) is looking at.”

Harris said product-development plans would be exempt from any new round of cuts.

“Anything having to do with the product or customer satisfaction is intact,” he said.