Employees will have a little over two months to choose a departure plan. "It will be necessary to have involuntary separation actions at the end of December," Chief Executive Officer Bob Nardelli said in a letter to employees, the Detroit Free Press reported.

The staff reductions of about 5,000 workers is in addition to 29,000 job cuts Chrysler has enacted in the past two years, including shift reductions at a Toledo, Ohio, plant and an accelerated closing of a Newark, Del., plant announced this week.

Nardelli's letter said Chrysler would "strive to do this in a socially responsible way, with respect and gratitude to those who have contributed so much to our company over the years."

"As an additional cost savings measure, we also will be reducing capital expenditures, but I assure you that we are protecting all major product programs," Nardelli said.