Underscoring the automaker's plight, Dieter Zetsche, chairman of Chrysler parent DaimlerChrysler AG's management board, indicated that Chrysler Group could even be sold -- something the automaker has previously denied.
Mr. Zetsche said DaimlerChrysler is "looking into further strategic options with partners beyond the business-cooperation partners" it already works with. "In this regard, we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler."
He said he was unable to provide any more details at this time.
DaimlerChrysler has deals with Volkswagen to build VW minivans domestically; with China's Chery Automobile Co. to develop a small car for North America; and with General Motors Corp. and BMW to develop hybrids.
The turnaround plan devised by Chrysler Group CEO Tom LaSorda aims to return the automaker to profitability next year with a target of a return on sales of 2.5% by 2009 by improving its marketing and its retail sales to fleet sales ratio.
North American market
North America now represents roughly 90% of Chrysler Group's business, with its product lineup historically heavily weighted toward minivans, trucks and sport utility vehicles. Mr. LaSorda said those models were once an advantage, but "the rules of the global marketplace have changed" due to higher fuel prices and other dramatic market shifts. So the automaker plans to develop more fuel-efficient models.
The employee cuts will include 1,000 salaried workers both this year and next along with 9,000 U.S. and 2,000 Canadian hourly plant workers over the next two years. Chrysler said it would also offer special retirement programs and other termination plans to be announced at a later date.
Mr. LaSorda said today's moves follow major other restructuring measures taken since 2001 that included cutting the work force by a third, and the closing, idling or sale of 16 plants.