Following Suit, Chrysler to Cut Production by 15 Percent

A long row of 2006 Dodge Ram pickup trucks sits idle in the back lot of a Dodge dealership in the south Denver suburb of Littleton, Colo., in a file photo from July 23, 2006. DaimlerChrysler AG's Chrysler Group will cut deliveries to dealers by 90,000 vehicles in the third quarter, as falling sales of trucks and SUVs have left it with bloated inventories, DaimlerChrysler Chairman Dieter Zetsche said Tuesday. (David Zalubowski - AP)

Chrysler said it would cut U.S. vehicle production by 15 percent in the second half of the year, compared with 2005 levels, and added that it was scouring its operations for further cost reductions. General Motors Corp. and Ford Motor Co. have already outlined plans to close plants and eliminate jobs.

The U.S. automakers have blamed higher gas prices for curtailing demand for pickup trucks and sport-utility vehicles. Chrysler went through a bruising round of plant closing and job cuts after its 1998 merger with Germany's Daimler-Benz AG.

Chrysler said it will build 705,000 cars and trucks in the second half of the year, down from the 829,000 built a year ago in the comparable period. This is the second time the company has cut projections for U.S production in the second half of the year.

Chrysler said most of the production cuts will involve high-profit truck and SUV models.

"We had to pull the trigger," Thomas W. LaSorda, Chrysler's president and chief executive, said in a conference call. "You can question did we wait too long. I'd have to say we did."

Chrysler's parent company, DaimlerChrysler AG, said last week that it anticipated Chrysler would lose $1.52 billion in the third quarter. LaSorda said Chrysler was pursuing "permanent structural" cost-cutting measures that could mean reductions to "address where we sit from a capacity standpoint."

In the auto industry, addressing "capacity" typically means plant closings and job cuts. LaSorda said that the automaker would "turn over all the rocks and look for costs."