US auto major Chrysler LLC has said that it plans to reduce production by shutting a minivan plant while extending summer shut downs at some of its other factories, citing slowing vehicle sales and record high gas prices.

Tom LaSorda, Chrysler's senior executive in charge of manufacturing said the company plans to "indefinitely idle" its St. Louis South minivan assembly plant. In a statement on its website, Chrysler said that it will indefinitely idle the St. Louis South Assembly Plant effective 31 October 2008 due to volume declines in the total minivan vehicle segment. It also plans to reduce operations at its St. Louis North Assembly Plant from two shifts to one shift, effective 2 September 2008. St. Louis North builds full-size trucks.

Chrysler said that these measures will lead to a reduction of approximately 2,400 hourly jobs (1,500 at St. Louis South, 900 at St. Louis North), and that it is committed to working with the UAW to address the manpower reductions in a socially responsible manner.

Under Chrysler's contract with the its union United Auto Workers (UAW), it cannot unilaterally close plants, which is why it lists them as ''idled indefinitely''.

The minivan plant employs around 1,500 workers and operates on a single daily shift. Workers were sent home early on Monday, when details of the plan were shared at an emergency town hall meeting.

Chrysler was acquired by private equity group Cerberus Capital Management last year, and has seen its US sales drop 19 per cent so far in 2008, marking the largest drop for any major US auto maker, even as executives say that Chrysler continues to meet or exceed financial targets, and is still well-capitalised. Sources also said that Cerberus is "absolutely not" considering a breakup of the company.

Indicating that changes are thus far limited to the minivan segment, its statement says that ''Chrysler remains committed to the Dodge Ram truck and Chrysler Town & Country and Dodge Grand Caravan minivan markets.''

''The Chrysler and Dodge minivans have held a leadership share in a shrinking market and we believe in the long-term viability of the pickup market,'' said Jim Press, President and Vice Chairman – Chrysler LLC. ''We are clearly in a challenging environment, but continue to be focused on building a profitable enterprise for the long term. These actions will help us achieve this goal.'' According to Autodata Corp., sales of the Dodge Caravan fell 25 per cent year-on-year from 2007.

Sales of minivans have been showing a downward trend for years, with this year's decline being worse on account of higher gas prices and other economic woes in the US economy, marked by a soft housing market and a credit crunch that made consumers pick more fuel-efficient and smaller vehicles. Minivans were Chrysler's number one product, and it launched its newest minivans last fall, while hoping to acquire new car buyers during the spring season when a number of families tend to shop for them.

However, the industry was caught on the wrong foot this year, with consumer preferences changing dramatically, leaving large SUVs, pick up trucks, and minivans unsold.