Detroit suffered a further blow yesterday with Chrysler announcing that it would slash one-quarter of its white-collar workforce, or almost 5,000 jobs, as merger talks with General Motors intensified, write Bernard Simon in Toronto and Francesco Guerrera in New York.

"These are truly unimaginable times for our industry", Bob Nardelli, the carmaker's chief executive, told employees in an e-mail. "Never before have auto industry sales contracted at such a fast rate."