April 14 (Bloomberg) -- Chrysler LLC, the money-losing U.S. automaker owned by Cerberus Capital Management LP, will drop the Jeep Commander sport-utility vehicle introduced in 2005 after sales of the model plunged, people familiar with the plan said.

Production of the large SUV, the worst-selling of Chrysler's six Jeep models, will end in mid-2009, said the people, who asked not to be named because the decision hasn't been announced.

The Commander would mark the fifth product canceled by Cerberus in its attempt to revive the Auburn Hills, Michigan- based automaker, purchased in August for $7.4 billion. Chrysler has 11 SUVs, including six Jeeps, and is scrapping vehicles that compete for the same customers.

``It makes sense that they are killing it,'' said Rebecca Lindland, an automotive analyst at Lexington, Massachusetts- based Global Insight Inc. ``Jeep needs to exist as a smaller brand,'' she said.

Chrysler spokesman Rick Deneau declined to comment.

Chrysler, the third-biggest U.S. automaker, chose to abandon rather than redesign the Commander after surging gasoline prices spurred a 43 percent decline in its sales this year. The Commander, which has three rows of seats and can hold seven people, averages about 17 miles per gallon of gasoline with a V-8 engine.

The vehicle will be canceled after an unusually short life span. Mainstream models generally are allowed to make it at least through one full product cycle, or the seven or eight years between significant redesigns, said Tom Libby, a Troy, Michigan-based analyst with J.D. Power & Associates.

Expected Better Sales

The Chevrolet Suburban SUV has been sold by General Motors Corp. since 1936. Toyota Motor Corp. introduced its Land Cruiser SUV, now in its seventh generation, in the 1950s.

U.S. sales of the Commander peaked at 88,497 in 2006, its first full year on the market under former owner DaimlerChrysler AG. Volume dropped 29 percent to 63,027 last year. At the first- quarter pace, Chrysler will sell 36,000 Commanders in 2008.

Jeep accounted for 23 percent of Chrysler's U.S. sales last year. The company also sells Dodge and Chrysler-brand products.

Chrysler didn't anticipate the segment would decline as rapidly as it did or that the Commander would steal so many sales from the Jeep Grand Cherokee, Libby said. The Commander is about 4 inches (10.2 centimeters) longer and 2 inches taller than the Grand Cherokee.

The Commander and Cherokee are the most expensive Jeeps, each with versions ranging from about $28,000 to almost $43,000, according to Edmunds.com, a consumer-information Web site.

U.S. sales of large SUVs as a group, including the Commander and Ford Motor Co.'s Expedition, dropped 28 percent through March after tumbling 9.2 percent in 2007, according to Autodata Corp. of Woodcliff Lake, New Jersey.

Cutting Jobs

Chrysler is trying to end two years of losses totaling more than $2.2 billion. In addition to cutting the four models before the Commander, it has announced plans to eliminate 25,100 workers, reduced plant shifts, put land up for sale, and closed a California design studio.

The automaker said in November it was canceling the Dodge Magnum station wagon as well as the Chrysler PT Cruiser convertible, Pacifica SUV and Crossfire sports car. The company also said it was cutting the second shift at the Detroit plant that makes the Commander and the Grand Cherokee.

President James Press said at the New York auto show last month that the company needs about half as many SUV models as it has.

Chrysler also wants to consolidate its 3,600 dealerships so that each carries the Dodge, Jeep and Chrysler brands.

New York-based Cerberus bought an 80.l percent stake of the company from DaimlerChrysler, now Daimler AG. Cerberus has installed new executives, including Press, who had been Toyota's top North American official, and Chief Executive Officer Robert Nardelli, former CEO of Home Depot Inc.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6bloomberg.net

Last Updated: April 14, 2008 00:01 EDT