Mercedes employs about 160,000 people in Germany

The cuts are 3,500 more than previously expected and will take place over the next 12 months.

Profits at Mercedes have fallen as the company struggles to deal with quality control problems and the strong euro.

The German carmaker has also suffered sharp losses at its Smart minicar firm.

Last month, DaimlerChrysler appointed Dieter Zetsche, previously the boss of its US arm Chrysler, to head Mercedes, replacing outgoing chief executive Juergen Schrempp.

The cuts will mostly affect the Mercedes plant in Sindelfingen, Germany, the company said.

Smart losses

News of the job losses at Mercedes came a day after German rival Volkswagen said it would build its new sports utility vehicle in Germany - a move which unions said would safeguard 1,000 jobs in the country.

Volkswagen had threatened to build its latest Marrakesh model in Portugal unless it could reduce the cost of manufacturing in its home market.

DaimlerChrysler reached a deal with employee representatives on its works council last year, which guaranteed that no worker would be laid off in exchange for labour reforms aimed at saving 500m euros ($601m; �340m) in costs.

That would mean that any cuts would most likely have come from voluntary redundancies.

The company employs about 160,000 people in Germany and has almost 385,000 workers worldwide.