Chrysler Corp. and the United Auto Workers union opened negotiations on a new contract yesterday, as the entire auto industry reported a sharp decline in sales during early October because of later introductions of new models.

Separately, Rep. James Blanchard (D-Mich) was gathering signatures from colleagues yesterday for legislation he will introduce this week to aid the financially-troubled Chrysler Corp. Blanchard will propose establishment of a Chrysler Corp. "Emergency Credit Assistance Act," to provide federal loan guarantees to the auto manufacturer on much the same basis as the aid that was given to Lockheed Corp. earlier this decade.

The financial plight of Chrysler served as a centerpiece for the UAW-Crysler talks in Detroit, where company Chairman Lee Iacocca told reporters: "Now is the-time for all good union men to come to the aid of their company."

Iacocca said the firm asked major concessions from the UAW, including a two-year freeze on wages and fringe benefits, first suggested in August and immediately rejected by the union.

UAW president Douglas Fraser, speaking to reporters yesterday, said he would seek "equality of sacrifice" from nonunion workers in return for making unprecedented concessions. Recent settlements at General Motors Corp. and Ford Motor Co. will raise basic wages by 31 percent and company hourly labor costs by 33 percent over three years -- a settlement that could cost Chrysler $267 million in its first year.

Figures released yesterday showed Chrysler sales in the first 10 days of October were off 33 percent to 199,289 cars compared with 272,689 a year earlier; there were nine selling days this year compared with eight in 1978. Chrysler fared best of the Big Three, possibly because of a $400-a-car rebate program that ended Sept. 30. The troubled company sold 23,800 cars in early October, down 33 percent. Some sales were described as early 1980-model purchases.

GM sales fell 34 percent to 111,871 cars while Ford sales slumped 40 percent to 57,065. American Motors Corp. sold an estimated 4,000 cars, down 25 percent and Volkswagen sold 2,553 cars from it U.S. plant in Pennsylvania, up 126 percent.