Chrysler Plans to Slash Product Lineup

Chrysler plans to cut its product line by half and also sharply reduce the numbers of dealerships as part of its strategy to cut costs and boost profitability, CNBC has learned.

The plan to cut the struggling No. 3 automaker's product line of around 30 different trucks, cars and sports utility vehicles across the Chrysler, Dodge and Jeep brands to 15 or more within a few years is part of a drive to cut costs.

Chrysler is owned by private equity company Cerberus Capital Management, which bought an 80 percent stake in the company from Daimler last August. Since appointing former Home Depot Chief Executive Robert Nardelli to run the company, Cerberus has been expected to shake up established practices in Detroit.

Shrinking Chrysler

The new plan is aimed at making a significant reduction in the about 3,600 dealerships that Chrysler has to a much smaller number that would sell all three brands. (See the on-air report at left.)

The project will where possible merge dealerships, with larger dealerships possibly being offered loans by Chrysler and Cerberus to buy out smaller dealers.

In the past few years, Chrysler has sought to encourage dealers to merge with or buy out other dealerships and stores carrying all three Chrysler brands.

Kerkorian Aide: Chrysler Not Viable as Stand-Alone Company

Chrysler cannot succeed as a stand-alone company, an advisor to billionaire investor Kirk Kerkorian said on Friday.

"Chrysler as a stand-alone company is not viable," Jerry York, a former Chrysler CFO, said at a panel discussion here being held in conjunction with the Chicago Auto Show.

York was responding to a question about whether he expected Chrysler's turnaround by new owner Cerberus Capital Management to succeed or whether the U.S. automaker would be sold in parts.

York added he guessed that Cerberus was considering every option "because of the pressure the company is under." York previously served on General Motors' board and Kerkorian in the past tried to buy Chrysler.

Speaking on the same panel, former Tower Automotive Chief Executive Kathleen Ligocki said she thought a sale of Chrysler in parts would be "Plan B" but Cerberus would keep its options open.

-- Reuters contributed to this report