The US car market is highly competitive

The German carmaker said on Thursday that market conditions in the highly competitive US car market would stay tough for the rest of the year.

DaimlerChrysler said operating profit in the first three months increased by 38% to 1.4bn euros ($1.5bn; �969m).

The carmaker said profits were given a boost because of ongoing cost-cutting in the company.

But the German automotive giant has struggled to keep its US operations on track after implementing restructuring efforts and cost-cutting exercises.

Tough market conditions

On Thursday, DaimlerChrysler said a weak US car market would make it hard for Chrysler to meet its 2003 operating profit target of $2bn.

"Given the difficult market conditions, Chrysler will further intensify its efforts to realise additional cost savings," the company said in a statement.

"However, during the last few weeks the market environment in the US has become even more challenging."

DaimlerChrysler further said its would slash its 2003 revenue target to 145bn euros, down from 150bn euros last year.

The group blamed exchange rates, weak demand and pricing pressure in its main markets for the cut.