Chrysler Slashes Another 25 Percent of White-Collar Workforce

Meanwhile, Chrysler's parent, the private-equity group Cerberus, continued its frantic search for a buyer, a day after the latest financial report from minority owner Daimler AG indicated that Chrysler has lost hundreds of millions of dollars this year.

Chrysler on Friday said the workforce reductions will be made over the next two months through voluntary retirements, salaried employee buyouts and "involuntary separations." The company said it also plans to "cut back on all discretionary and overhead expenses and reduce capital expenditures not connected to major product programs."

CEO Robert Nardelli, in a statement, said Chrysler shortly would make "additional organizational and restructuring announcements" as the company "works to find new ways to operate."

Wall Street analysts are saying that Cerberus' well-documented negotiations with General Motors to take over Chrysler are likely to fall short of the mark, with critics insisting that a GM-Chrysler merger makes little or no financial sense for investors or for the companies.

Chrysler insiders have reported that the company also has been negotiating with Japanese automaker Nissan to take a minority stake in the U.S. firm. The two companies already have several product-sharing agreements.

Inside Line says: The lights are growing dimmer in Auburn Hills. — Paul Lienert, Correspondent