updated 12/11/2006 12:39:58 PM ET 2006-12-11T17:39:58

DaimlerChrysler AG could lay off up to 4,000 workers in North American truck operations next year due to a downturn in demand, the head of the automaker’s truck operations said on Monday.

Andreas Renschler, a member of DaimlerChrysler’s board of management, said the cuts in the United States and Canada would include 800 layoffs that have already been announced and that will take effect in March in Canada.

Speaking to reporters in Dearborn, Michigan, he said demand in the truck business, which is coming off a strong year, will slow in 2007 but will likely recover toward the end of the year.

He said he expects demand for heavy-duty trucks in the United States, Canada and Mexico to fall 39 percent in 2007. Demand for medium-duty trucks will likely slip 25 percent, he said.

“Our challenge is to manage the cycles and to come through the down cycles while preserving profitability,” Renschler said.

The automaker’s Detroit Diesel unit will begin producing a new heavy-duty truck engine in 2007, which will represent the company’s move to a single-engine platform for its biggest trucks. The new engine will provide a 5 percent to 8 percent increase in fuel economy, based on current environmental standards, Renschler said.

“If you look to our customers, fuel costs are one of the biggest costs they have to pay,” he said.

Chrysler, which posted a $1.5 billion loss in the third quarter, has tapped executives from its German parent’s Mercedes division to work on a restructuring plan, including cutting $1,000 from the cost of each vehicle it makes.

Renschler said Chrysler’s restructuring plan is being prepared, but he was unsure when it would be complete. Other Chrysler executives have said the plan will be announced in the first quarter.

Chrysler started its restructuring study, called “Project Refocus,” in late July with teams of experts reporting to Chief Executive Tom LaSorda and Chief Operating Officer Eric Ridenour.

When asked if DaimlerChrysler’s board has confidence in LaSorda, Renschler replied, “Absolutely.”

Renschler also said the board still believed the company was better off having Chrysler as part of a more diversified portfolio of businesses.

Copyright 2012 Thomson Reuters. Click for restrictions.

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