June 30 Memo to Chrysler Employees

Dear Employees,

The auto industry is going through a period of unprecedented change. A dramatic U.S. economic slowdown and auto industry contraction leaves Chrysler — like other automakers — to face difficult issues and decisions.

Our worldwide sales are down 14 percent, year to date — even considering increases in Canada, Mexico and international markets.

Our plan for 2008 has been aggressively conservative, allowing us to be better positioned than some of our competitors for the current slowdown. We continue to exceed goals and financial plans, and we are better positioned than we were last year. We are focused on improving our business today.

That's why we must act now to become better aligned with the shift towards smaller, more fuel-efficient vehicles. In order to meet those market challenges, we will be making volume-related manufacturing reductions at two of our North American assembly plants.

The St. Louis Assembly Plant South will be idled indefinitely, effective Oct. 31, due to volume declines in the total minivan vehicle segment.

Operations at the St. Louis Assembly Plant North, where full-size trucks are built, will be reduced from two shifts to one, effective Sept. 2.

We are committed to working with the UAW to address these reductions in a socially responsible manner. As we have done in the past, the UAW and management leadership will hold employee meetings to review the special program offerings at affected locations. We are committed to providing employees with this information so they are able to make appropriate decisions.

We also remain committed to our bread-and-butter Dodge Ram pickup, and Chrysler Town & Country and Dodge Grand Caravan minivans. We believe there is a strong and viable pickup truck market, and our minivans have held their leadership share in a shrinking market.

We are clearly in a challenging environment, but by tackling the difficult challenges head-on, we are taking the steps to return Chrysler to profitability for the long term.

Sincerely,