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AUTOSHOW-INTERVIEW-UPDATE 1-Daimler's Chrysler to cut more costs

(Adds further quotes, detail)

By Madeline Chambers and Michael Steen

PARIS, Sept 26 (Reuters) - Top executives at the U.S. arm of German automaker DaimlerChrysler AG on Thursday pledged to continue cutting costs after meeting next year's goals in a bid to achieve long term profit growth for the unit. The Chrysler unit chiefs, ahead of schedule on a restructuring plan that had envisaged break even at the end of this year, also hinted they may exceed their target of posting a two billion euros adjusted operating profit next year.

"Assuming there are no major events out of our control, we continue to at least deliver on our turnaround plan...we have been able to beat targets (this year) and it would be nice to continue this track record," Chrysler Presdient Dieter Zetsche told Reuters in an interview at the Paris Auto Show.

Chrysler has achieved the better-than-expected results so far, posting an operating profit of over 900 million euros in the first two quarters, due mainly to greater-than-expected cost savings in the last 18 months.

Chrysler chief operating officer Wolfgang Bernhard told Reuters it had achieved cost cuts of 10 percent in the past two years and was on track to reach its goal of a 15 percent cut by the end of 2003.

"We will not stop the cost cuts after 2003," Bernhard said. "There comes a time when the low hanging fruit is gone, but we will look for further improvements."

He said increased component sharing across models and boosting plant efficiency were the main focus.

Zetsche, who said on Wednesday he expected Chrysler to post a profit in the next two quarters of the year, acknowledged the second quarter is traditionally the strongest and the third quarter the weakest.

CONFIDENT OF MARGIN TARGET

He also reiterated Chrysler's target of a five percent return on sales. "We are confident we will get there in the foreseeable future."

Zetsche acknowledged that revenue growth was now essential and said he hoped to see a major impact from Chrysler's new products by about the middle of next year, despite continued incentives programmes at U.S. automakers which eat into revenues and profits.

Last year Chrysler fell short on the revenue side.

"We need to create the pull effect rather than the push," said Zetsche who hopes to do this partly by increase Chrysler's volume by one million vehicles over the next 10 years.

Zetsche also said that U.S. auto sales will likely be "north of 16 million units" in 2003" despite continued incentives.

U.S. vehicle sales in Auust surged to a seasonally adjusted annual rate of 18.7 million vehicles on the back of generous incentives.