March 26 (Bloomberg) -- Cerberus Capital Management LP misled the Canadian Auto Workers about plans to boost Chrysler LLC's North American market share and retain jobs when it sought support to buy the automaker, the union's president said.

Cerberus Chairman Stephen Feinberg told the CAW ``that they weren't going to slice and dice and sell,'' Buzz Hargrove said in an interview. ``He's trying to cut his way to profitability, as opposed to grow the business.''

Since Cerberus took control in August, Auburn Hills, Michigan-based Chrysler has pared four models and sought to trim more than 12,000 workers as the North American auto market deteriorated. Chrysler said last week it may need to reduce its sport-utility vehicle offerings by half.

``That's great for Cerberus, but it's not great for workers, because a lot of people are going to lose their jobs and a lot have lost their jobs,'' Hargrove said today in New York.

Hargrove said he was persuaded to throw his support behind the bid for the automaker because of Cerberus's assurances during the negotiations with Chrysler's former parent, DaimlerChrysler AG, known now as Daimler AG.

``We were misled,'' Hargrove said. Feinberg ``has never met with us since then to explain the shift in thinking.''

Spokesmen for Cerberus and Chrysler said they disagreed with Hargrove's characterization.

Leadership Position

Chrysler management ``is taking the right steps to ensure the long-term viability of the company,'' said Cerberus spokesman Peter Duda. ``Our mutual resolve to restore Chrysler to its leadership position as an iconic brand is unwavering.''

The CAW's contract for about 30,000 workers at Chrysler, Ford Motor Co. and General Motors Corp. expires Sept. 16.

Chrysler's decision to cut the Pacifica crossover SUV, which combines car and truck elements, was ``very concerning'' because the vehicle is part of a fast-growing segment, said Hargrove. ``They discontinued it without having a replacement.''

The automaker needed to make changes ``including right- sizing the company for shrinking market conditions,'' Chrysler spokeswoman Michele Tinson said in an e-mailed statement. ``No hidden agendas are included within our business practices.''

Because of Chrysler's strength in Canada relative to its U.S. operations, the union may target the automaker for a strike if negotiations sour later this year, though no such plans have been made, said Hargrove.

Tiered Wages

The union may strike if pressed to consider a tiered wage system like the one that the United Auto Workers in the U.S. agreed to last year, he said. The accord gives newer workers less pay for jobs similar to those performed by more-veteran employees.

``That's the most destructive thing for the companies as well as the workers and their unions,'' he said.

The CAW won't accept wage cuts or major changes to retirees' health care plans, said Hargrove. ``Pay cuts can't save jobs,'' he said.

He said he plans to negotiate first with GM, Ford or Chrysler and attempt to get similar terms with the remaining two. The CAW hasn't yet determined which automaker will be targeted, Hargrove said.

The rise of the Canadian dollar's value relative to the U.S. dollar may be a sticking point in negotiations because of concerns over higher costs, said Hargrove. He estimated labor expenses are roughly 10 percent higher in Canada than the U.S.

Exporting vehicles to the U.S. from Canada has become less profitable as the Canadian dollar remains roughly at parity with the U.S. currency, Hargrove said, noting that profits from exporting vehicles to Canada have increased. As much as 90 percent of the new car sales in Canada are autos that were made in the U.S. and imported, he said.

Cerberus, a New York-based buyout firm, has an 80.1 percent stake in Chrysler. The remaining portion is held by Daimler.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

Last Updated: March 26, 2008 16:42 EDT