By John McCrank

TORONTO (Reuters) - The Canadian Auto Workers union could abandon trying to get early contract deals with General Motors of Canada (GM.N: Quote, Profile, Research) and Chrysler LLC [CBS.UL] if progress is not made in negotiations by 6 p.m.(2200 GMT) on Wednesday.

The union set the deadline on Monday, saying that if headway on new three-year deals is not made, negotiations would be suspended until later in the summer, when the union will be in a position to set a strike deadline.

The CAW's current contracts with the two automakers do not expire until Sept. 16, but the union ratified an early agreement with Ford Motor Co of Canada (F.N: Quote, Profile, Research) on May 4, and had hoped to reach quick deals with GM and Chrysler that would follow the Ford pattern. For details, see factbox: [nN14493937].

The talks come at a difficult time for both the Canadian union and the Big Three automakers, which have been cutting production and jobs in North America in a bid to return to profitability.

GM, which has lost a combined $51 billion over the past three years, has cautioned the U.S. auto market has become weaker than it had projected earlier this year, with more customers shunning gas-hungry SUVs and trucks, sectors in which it had been strong.

Chrysler, now owned by Cerberus Capital Management, no longer reports earnings publicly, but it has taken a number of steps to cut costs in recent months, including offering buyouts to its 44,000 U.S. hourly workers. The No. 3 U.S. automaker lost $1.6 billion in 2007.

It's also seen a less than ideal time for the CAW. One problem is the economic downturn in the United States -- the main market for Canadian exports.

On top of that, it costs the automakers more to produce cars and trucks in Canada thanks to the rapid appreciation of the Canadian dollar, which has gained about 60 percent in value since 2002 and is now roughly at par with the U.S. dollar.