Feb. 13 (Bloomberg) -- Chrysler LLC will submit a viability plan under its $4 billion U.S. government loan that outlines two recovery alternatives, one including a “strategic partnership” and the other without it, according to a person familiar with the automaker’s proposal.

The company must submit a Feb. 17 progress report to the government as a condition of the loan. The person declined to be identified because Auburn Hills, Michigan-based Chrysler’s plan isn’t public, and didn’t provide details of the partnership.

Chrysler, the third-largest U.S. automaker, has agreed in principle to trade 35 percent of its equity to Turin, Italy-based Fiat for small-car technology and access to global markets. The accord depends on Chrysler getting an additional $3 billion in federal aid and approval by the U.S. government.

General Motors Corp. and Chrysler won approval for $17.4 billion in U.S. loans to prevent them from running out of cash for operations as global auto sales collapse. The automakers are seeking concessions from unions, lenders and creditors to comply with terms of the assistance.

Chrysler expects to be able to meet the requirements of its loan agreement, President Jim Press said yesterday in Chicago.

Shawn Morgan, a Chrysler spokeswoman, today declined to comment on specifics of the plan and said the company is looking forward to submitting it on Feb. 17.

Car Czar

The automaker has been in regular contact with Treasury Department officials and members of the White House’s National Economic Council about its efforts, the person said. Chrysler and GM are supposed to submit their progress reports to an official designated by President Barack Obama.

That official hasn’t been named, and the person said Chrysler didn’t know whether that appointment would be made in time for the progress report.

Lawrence Summers, director of the National Economic Council, said, “We’ve had a number of strong people who’ve been working on this for some time and I’m sure that that group, as we get into analyzing a plan, will be augmented.”

Summers, speaking today on Bloomberg Television’s “Political Capital with Al Hunt,” didn’t say how quickly the appointment of a so-called car czar would be made.

When asked if Steven Rattner, co-founder of buyout firm Quadrangle Group LLC in New York, would be named to that post, Summers said, “The president makes personnel announcements.” He added that “I don’t think it profits us to try to forecast them.”

Sales Outlook

Chrysler’s plan includes the possibility that annual U.S. auto sales may not exceed 10 million vehicles for as long as four years. Industrywide sales fell 18 percent to 13.2 million cars and light trucks last year and have averaged more than 16 million annually during this decade.

Sales last year at Chrysler tumbled 30 percent, the most of any major automaker. The company relies more than competitors on pickup trucks, sport-utility vehicles and vans, which lost sales last year as gasoline prices rose to a record high and consumers shifted to more fuel-efficient cars.

Chrysler has eliminated 32,000 jobs, more than 33 percent of its total, since August 2007, when Cerberus Capital Management LP took an 80.1 percent stake in the automaker. Chrysler is offering buyouts to all 26,800 of its U.S. union workers.

The company also has asked its dealers to accept lower margins on the vehicles it sells and has sought lower prices and a freeze on increases because of rising material costs from parts suppliers.

Once Chrysler completes the actions under its viability plan, it will have reduced fixed costs by more than $3.8 billion since Cerberus bought the company, Press said yesterday.

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

Last Updated: February 13, 2009 16:10 EST