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Last Updated: Tuesday, 18 October 2005, 10:37 GMT 11:37 UK
Chrysler hopes to follow GM deal
Chrysler's 300C sedan
Chrysler could potentially save millions of dollars each year
DaimlerChrysler, the world's fifth largest carmaker, is to seek talks between its Chrysler arm and the United Auto Workers (UAW) union on savings.

Chief executive-designate Dieter Zetsche said it was looking for a deal on retirees' healthcare costs, similar to the one agreed at General Motors.

He said Chrysler and the UAW had an agreement that any savings made at GM would also apply to them.

On Monday, GM said it would cut its multi-billion-dollar healthcare costs.

Discussions soon

The deal is part of a broad plan revealed by GM to try to cut costs and return to profit.

Following the announcement, shares in GM went up 13% even as it posted a fourth consecutive quarterly loss, and DaimlerChrysler shares went up too.

"We definitely will engage in discussions right away" said Mr Zetsche, who becomes DaimlerChrysler chief executive at the end of 2005.

But Chrysler may look at a slightly different method of achieving the health cost savings, he added.

GM estimated that the deal with the UAW - which still has to be agreed by union members - could save it $3bn annually before taxes.

Chrysler has fewer retirees per active worker compared with GM, but experts say Chrysler could still reduce its annual expenses by 180m-300m euros ($215m-$359m; 123m-205m).

The GM agreement also paves the way for Ford to seek a similar cost-savings plan.

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