Chrysler LLC has announced that its work with Nissan Motor Co on the development of the Dodge Hornet and Nissan Titan pickup truck have been put on hold till they can reduce costs, as the two companies evaluate their financial futures.

"Due to the current economic conditions, Nissan and Chrysler leadership directed their teams working on the two projects to work together in the first quarter of 2009 to improve the financial objectives for both companies before the projects move further forward," Chrysler spokesman Dave Elshoff said in a written statement late on Thursday.

Chrysler announced in April that Nissan would build a fuel-efficient small car that Chrysler would then sell in North America and Europe under the Dodge Hornet name. In return, Chrysler would build Nissan a full-size pickup truck based on Nissan's design at its Saltillo, Mexico, assembly plant.

A third project, in which Nissan agreed to supply Chrysler with a new car based on the Nissan Versa sedan for limited distribution in South America in 2009, has not been cancelled. Press didn't provide further details in his keynote address at the Chicago Auto Show.

"Because of current economic conditions, Nissan and Chrysler teams working on the two other projects have been asked to ensure that financial objectives for both companies can be met before these two projects move forward," said a statement distributed by Nissan North America Inc.

Nissan, Japan's No 3 automaker, said earlier this that week it would revise its product portfolio, including the cancellation of selected future programmes, after its first annual operating loss in 14 years.

Nissan and Chrysler made the arrangements early last year when Chrysler was seeking a global technology partner after the demise of its merger with Germany's Daimler AG. At the same time, Nissan needed a leg-up in the full-sized pickup segment, where its US-built Titan was proving a development resource drain. Now a year later, both automakers' situations have worsened.

Press also cautioned that the industry should not expect a rebound to historic sales levels when the economy rebounds. "We need to accept and come to grips that sales could stay at this level of ten million for four more years," he said in reference to overall US light vehicle sales, which fell to 13.2 million last year from a recent average of 16 million.

Chrysler and General Motors Corp executives are racing to pull together the final pieces of their viability plans that must be submitted to the US Department of Treasury on Tuesday. Chrysler is looking for $4 billion in federal bailout loans.

This week, Nissan chief executive Carlos Ghosn said the automaker may post a $2.9 billion loss for the current fiscal year, and is cutting 20,000 Nissan jobs around the world.

Japan's automakers have been stunned by the appreciation of the yen against the dollar in recent months. Higher yen values raise the manufacturing cost of critical Japanese-made components, such as small-car engines and electronics.

Both Nissan and its chief Japanese rival Toyota Motor Corp have reacted to forecasted losses by ordering stern reductions in operating costs around the world, and by making cuts in capital investment plans.