The shakeout in the global auto industry shifted into high gear as automakers scrambled to trim their labor costs, streamline their supplier base and meet the sudden demand for smaller, fuel-efficient cars. As share prices slumped, bottom-fishing investors looked to profit from what is shaping up to be an intense period of industry restructuring and consolidation.

DaimlerChrysler announced that it would shed 8,500 jobs, most of them in its Mercedes division in Germany. Under a no-layoff agreement with its unions, the company will have to achieve the cuts through attrition and buyout packages. It's the first major move in Europe by Dieter Zetsche, DaimlerChrysler's incoming chief executive, whose previous turnaround at Chrysler cut 26,000 jobs.

Meanwhile, Porsche -- the small but profitable maker of luxury sports cars and SUVs -- announced plans to buy 20 percent of Volkswagen. The two companies go way back: Ferdinand Porsche designed the first VW beetle and his grandson ran VW until 2002. But Porsche's interests go beyond family ties. With foreign hedge funds threatening to buy control of VW and break it up, Porsche wants to keep the company in German hands and protect the source of 30 percent of its parts.

Speaking of parts, Ford announced it would buy more of them from fewer suppliers -- 100 instead of more than 200 -- in an effort to cut costs and build longer-term relationships. The move will certainly spur consolidation among the 10,000 companies still left in the industry, but could also mean more of the work will be done overseas.

And Delphi, the biggest parts maker, moved closer to a bankruptcy filing after it missed a loan payment. The company is reportedly looking for $6 billion from its biggest customer and former parent, General Motors, even as both companies press for wage and benefit concessions from reluctant unions.

The latest U.S. sales figures show a dramatic shift away from gas-guzzling and profitable SUVs toward more fuel-efficient compacts, many of which are selling right off the delivery truck. Last month, Ford said it would move to put hybrid technology licensed from Toyota in half of its new models by the end of the decade. GM is hoping consumers will appreciate the improved mileage offered by the new line of full-size SUVs, which it has looked to as the linchpin of its latest turnaround strategy.

Japanese automakers, already benefiting from the shift to smaller cars, hope to further capitalize on that trend. Nissan last week joined Honda and Toyota in announcing plans to offer new subcompact models for the U.S. market sometime next year.