Chrysler LLC is eliminating 25 per cent of its salaried workforce starting next month as its majority owner continues to search for a buyer or merger partner for the automaker.

CEO Robert Nardelli said in a statement Friday that more restructuring announcements will be made in the near future as the company "works to find new ways to operate."

Chrysler has a white-collar workforce of about 17,300, so a one-quarter reduction means the loss of about 4,300 jobs.

In addition, the company said it will cut 25 per cent of its contract employees, who work for other companies under contract with Chrysler. It wouldn't say how many contract workers it has.

The company said voluntary termination packages will be offered to salaried employees starting in November, followed by involuntary separation actions at the end of December.

Chrysler also said employees have been told to cut discretionary and overhead expenses and reduce capital expenditures not related to major products.

"These are truly unimaginable times for our industry," Nardelli said.

"We continue to be in the most difficult economic period most of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy," he said. "Never before have auto industry sales contracted at such a fast rate."

Chrysler's sales are down 25 per cent through the first nine months of the year, the worst decline of any major automaker.

The announcement comes a day after the company said it will cut 1,825 jobs by eliminating a shift at an Ohio Jeep plant and accelerating the closure of a sport utility vehicle factory in Delaware because of the slowing economy and a shift toward smaller vehicles.

Cerberus seeking sale or merger of Chrysler

Cerberus Capital Management LP, which owns 80 per cent of Chrysler, is talking with other automakers to try to arrange a sale or merger of the company.

In addition to discussions with General Motors Corp., Cerberus is also reported to be talking with Nissan Motor Co. and Renault SA.

Renault has denied the talks, while Nissan refused to comment. France's No. 2 automaker owns 44 per cent of Nissan, while the Japanese company owns 15 per cent of Renault.

At least one analyst doesn't like the idea of a deal with those companies and doesn't believe one is imminent.

"Nissan and Chrysler already have joint product-based projects in the pipeline and extending those wouldn't require an equity tie-up," UBS auto analyst Tatsuo Yoshida said.

"If Chrysler became part of the alliance, Nissan and Renault would have to dedicate a lot of human and other resources to fixing the company — resources they don't have," he said.

Canadian cuts

In Canada, Chrysler employs about 10,000 people and operates a car assembly plant in Brampton, northwest of Toronto, a minivan factory in Windsor in southwestern Ontario and parts operations in Toronto. Of the total, 938 work in salaried positions.

Chrysler spokeswoman Mary Gauthier said she couldn't provide details on how the latest cuts will affect the Canadian workforce since the company it isn't providing breakdowns by country or job function.

With files from the Associated Press, Canadian Press and Reuters