'We're going to get rid of those that are not core,' he said, noting that the automaker could cut up to 100 of its largest 300 suppliers, while adding others. 'We're going to look at every one.' 

Parts makers are being buffeted by the same downward spiral that has General Motors Corp., Ford Motor Co. and Chrysler fighting for survival. U.S. car and truck sales are on pace this year to fall to around 14 million vehicles, the lowest level in more than a decade, from 16.1 million last year because of a weak economy and sharply higher gas prices. 

On Friday, the government reported that consumers spent more money on gasoline in May and June than on new cars for the first time in 26 years.

With sales falling so steeply, one-third of North American auto suppliers are at risk of filing for bankruptcy, Grant Thornton LLP said in a research report last week.

John Casesa, a long-time auto analyst and managing partner of Casesa Shapiro Group, said automakers are trying to 'rationalize' the supply base. 'The OEMs are becoming more deliberate of letting suppliers fail,' Casesa said. 'Many firms will be left to fail in this terrible downturn.'

Casesa said auto supplier bankruptcies -- seven so far this year -- are on pace to hit the highest number since the 2001 recession, or even top it.

David Cole, chairman of the Center for Automotive Research, said cutting suppliers 'has been a goal for years' for all of the automakers, calling it 'a nightmare' to manage relationships with thousands of suppliers.

Campi said Chrysler will pick as many as 10 key suppliers to participate in a 'Supplier Choice' program, under which components manufacturers would not have to bid against other companies for contracts. Campi said the company would work with the suppliers to set a market price for the contract. Japan's Denso Corp. is the first in the program, Campi said, and he hopes to name a second company within 30 days.

Campi and Chrysler's chief financial officer met with 160 key suppliers Thursday and offered them a closer look at the company's books to reassure them of the financial health of Chrysler, which is now privately held and doesn't report earnings.

'We did that specifically because of the trauma in the industry,' Campi said.

A survey of components manufacturers conducted by Planning Perspectives Inc. of Birmingham found that Chrysler's relationship with its suppliers was the worst among the top six automakers in the United States.

In an effort to improve those relations, the Auburn Hills automaker has created a dedicated supplier relations team and expanded its supplier advisory council. It is ending a 2000 program called 'Materials Cost Management' immediately because it didn't work, Campi said. Under that program, suppliers were required to achieve certain cost reductions each year.

At GM, Bo Andersson, group vice president for global purchasing and supply chain, said that as the automaker shrinks truck and SUV production, it is reducing the number of suppliers it uses. It also plans to shift a big chunk of its total contracts to larger suppliers. GM has cut the number of suppliers it has in North America over the last five years from 2,500 to 1,700 today.

'The good ones will survive and the bad ones will go away,' he said. The industry 'will come out of this but it will take some time.'

GM buys $94 billion in parts annually, with 186 suppliers supplying components to all four major worldwide regions totaling $49 billion, or 52 percent of all purchases.

Tony Brown, group vice president for global purchasing at Ford, said the automaker would prevail in what he called a 'take-no-prisoners' environment.

Ford has improved its relationships with suppliers, which Brown admitted were testy at times in the past -- 'just a bit short of open warfare.'