Ford also said on Tuesday it would shut down 10 of its North American assembly plants for an extra week in January due to poor sales.

Slumping sales

US vehicle sales dropped 37 per cent in November amid a worsening economic crisis and General Motors and Chrysler are believed to be on the brink of collapse.

A proposed $14bn government bailout collapsed in the senate last week after politicians and unions failed to agree on its terms and conditions.

On Monday, the White House again warned that the US auto industry would have to make "concessions" to win a government bailout.

Chrysler said it had informed the United Auto Workers union, employees and suppliers about its action.

The company is privately owned, with 80.1 per cent owned by New York private investment firm Cerberus Capital Management LP.