Chrysler is cutting deliveries to its US dealerships by more than a fifth after poor summer sales means there is a glut of vehicles on their forecourts.
Chrysler's sales were down over the summer, despite price reductions
The US unit of German-American car firm DaimlerChrysler said that deliveries will fall by 90,000 cars to 290,000 in the three months to 30 September.
Chrysler said the cuts, which will continue into the fourth quarter, would mean some temporary factory shutdowns.
The firm's woes are mirrored by its US rivals Ford and General Motors.
'Helping the dealers'
Chrysler said it intends to trim shipments to dealers by a further 45,000 units in the last three months of 2006, meaning a combined drop in deliveries of 16% during the second half of the year.
The firm has declined to say which of its factories would be hit by the shutdowns. At present it has three plants in the US and one in Mexico off line, out of a total of 14 North American manufacturing facilities.
"Our goal here is to keep our dealers - get them back - into a more competitive inventory level, so we can be ready for the second-half new product introductions," said Chrysler chief executive Tom LaSorda.
Mr LaSorda added that Chrysler currently has no plans to permanently close any of its North American plants, unlike Ford and GM.
The overall boss of DaimlerChrysler, Dieter Zetsche, said Chrysler had no choice but to cut deliveries.
"After the disappointing sales performance in July and August, we had to finally bite the bullet," he said.
Despite price reductions, US sales at Chrysler plummeted 37.4% in July when compared with the same month last year, and by 4.2% in August.
The news that Chrysler is cutting deliveries follows after it said last week that third-quarter losses at the unit would total $1.52bn (£808m), more than twice its previous estimate.
Weak product ranges
Chrysler, Ford and GM, the "Big Three" US carmakers have all been plagued by an over-reliance upon thirsty trucks and sports utility vehicles.
Sales of such cars have fallen in the US as petrol prices have risen strongly this year.
While Japanese firms such as Toyota and Honda have seen their US sales rise on the back of hybrid cars and other more fuel-efficient vehicles, Chrysler, Ford and General Motors (GM) have been slow to introduce such models.
Ford announced last week that it is cutting its US workforce by 14,000 as part of its efforts to reduce costs and return to profitability.
Back in July, GM announced that its second quarter losses had widened to $3.2bn from $987m in 2005, due to the expense of its own ongoing cost-cutting work.