Oct. 23 (Bloomberg) -- Chrysler LLC, now in merger talks with General Motors Corp., will cut 1,825 jobs as it shuts a Delaware factory a year early and pares output at an Ohio plant because of slumping sport-utility vehicle sales.

Both moves will occur by Dec. 31, Auburn Hills, Michigan- based Chrysler said today in a statement. Closely held Chrysler, which isn't required to report financial results, also indicated it lost about $565 million in the second quarter.

The Delaware-made SUVs ``are simply not selling,'' said Aaron Bragman, a product analyst at Global Insight Inc. in Troy, Michigan. ``It reached a certain point where it simply doesn't make sense to keep the plant open.''

Chrysler is under pressure to trim costs as the global credit crunch threatens to push 2009 U.S. auto sales to a 27- year low. Cerberus Capital Management LP, which bought most of the automaker last year, is in talks with GM and Nissan Motor Co. about a merger for Chrysler, according to people familiar with the matter.

Chrysler is still 19.9 percent owned by Daimler AG, which said today it reduced the book value of that stake to zero from 171 million euros ($220 million) at the end of the second quarter.

There is ``no new news'' in talks on selling the rest of that holding to New York-based Cerberus, Daimler Chief Executive Officer Dieter Zetsche said today on a conference call.

GM, Chrysler and Cerberus have declined to comment on merger discussions.

Delaware, Ohio

Chrysler's Newark, Delaware, factory makes the Dodge Durango and Chrysler Aspen SUVs and has 1,000 workers. It was was scheduled to close by the end of 2009. At the Toledo, Ohio, plant, Chrysler will drop one production shift, leaving the factory with daily shift building Dodge Nitro and Jeep Liberty SUVs. The plant employs 2,100 people.

Stuart Schorr, a Chrysler spokesman, declined to comment on whether the Durango and Aspen would be canceled, whether the Delaware production would be shifted elsewhere, or how output at the Ohio factory might be affected.

There is a 180-day supply of Durangos and a 106-day supply of Aspens, Schorr said. Analysts consider a 60-day inventory to be the industry standard. The Delaware plant also builds hybrid versions of the SUVs, the only gasoline-electric models now available from Chrysler.

U.S. sales of SUVs are down 19 percent this year through September, according to Autodata Corp., in Woodcliff Lake, New Jersey. Durango sales are off 54 percent and Aspen sales are down 21 percent.

Daimler's Chrysler Losses

While Daimler's third-quarter earnings report today gave a glimpse at Chrysler's financial performance, those figures have been disclosed with a one-quarter lag, so they reflect the U.S. automaker's second-quarter results.

Under U.S. accounting rules, Daimler's third-quarter net loss for its holdings in Chrysler's auto operations was 76 million euros ($97 million), according to a statement from Chrysler.

That represents most of the 88 million euros ($113 million) in Daimler's losses related to Chrysler Holdings LLC, which includes the U.S. automaker and its finance operations.

Chrysler has said that Chrysler LLC's quarterly losses are about five times the size of Daimler's, or $485 million. Losses for Chrysler Holdings LLC would be $565 million. In the first quarter, losses on that basis were $515 million, according to Chrysler.

Chrysler has said in a separate statement it had $11.7 billion in cash at the end of June and achieved earnings before taxes, interest, depreciation and amortization of $1.1 billion through the first six months of 2008.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan at mramsey6@bloomberg.net.

Last Updated: October 23, 2008 11:31 EDT