Chrysler to shut minivan plant as sales slump

By Poornima Gupta

DETROIT (Reuters) - Chrysler will shut its St Louis minivan plant, cutting production of its top-selling vehicle and 2,400 factory jobs in a sign of the automaker's troubles with a market reeling from record gas prices.

Chrysler said it would close the assembly plant -- one of two North American facilities dedicated to the Dodge Caravan and Chrysler Town & Country -- and eliminate a shift at a nearby assembly plant that makes the Dodge Ram pickup truck.

The third largest U.S automaker, which relied on sales of trucks (which include minivans) and SUVs for almost 70 percent of its sales, said it expected to post a significant decline in sales in June.

Chrysler's production cuts follow similar steps from larger rivals General Motors (GM.N) and Ford Motor (F.N), both of which have cut truck production in response to weaker sales in recent weeks.

Chrysler, now controlled by private equity group Cerberus Capital Management CBS.UL , has seen U.S. sales drop 19 percent in 2008, the largest drop for any major automaker.

"This environment forces us to make some very difficult decisions," Tom LaSorda, Chrysler's senior executive in charge of manufacturing said on Monday.

"The auto industry is going through some turbulent times -- slow economy, including mortgage crisis and the weak housing market, escalating oil prices and the rapid consumer shift from trucks and SUVs to smaller, more fuel efficient vehicles," he said.

LaSorda, like other Chrysler executives, said the automaker was meeting and exceeding its financial targets, in part because executives had been more cautious early on about the risk for a sales downturn this year.