DaimlerChrysler's Chrysler Group plans to cut more than 10,000 factory jobs and close at least two plants to return the U.S-based unit to profitability, the Detroit News reported on Monday.
A secret restructuring plan dubbed "Project X" is focused on transforming Chrysler into a smaller, more efficient automaker with closer ties to its German parent company and the Mercedes-Benz luxury division, the newspaper said, citing sources.
Chrysler spokesman Jason Vines called the report "speculation" and declined further comment.
A restructuring plan for Chrysler is scheduled to be announced on Feb. 14 in conjunction with fourth-quarter results for its parent company.
The plan would include some "changes" to manufacturing operations, Chrysler Group Chief Executive Tom LaSorda told reporters in Las Vegas on Saturday.
The newspaper said an assembly plant in Newark, Delaware, and an engine plant in Detroit would likely be closed.
"We need to go deeper and faster, or else what's the point?" DaimlerChrysler AG Chairman Dieter Zetsche is said to have told Chrysler officials recently, the newspaper said.
Teams from Mercedes and the consulting firm McKinsey have become fixtures at Chrysler headquarters in Auburn Hills, Michigan, according to the paper.
Chrysler was dogged by inventory management problems in 2006, including its disclosure that it had been holding large numbers of vehicles in a "sales bank" before they had been ordered for showrooms.
At one point last year, the No. 4 U.S. automaker had about 100,000 vehicles sitting in the sales bank of unassigned inventory that were not being disclosed in its monthly sales calls for analysts.