By Soyoung Kim

The company, which emerged from bankruptcy six months ago, announced the latest job cuts as it reported a bigger quarterly net loss and cut its full-year revenue outlook.

Auto parts makers are reeling from U.S. light-vehicle sales declines to 15-year lows, a consumer defection from high-margin trucks and SUVs, increasing energy and commodity costs, and pressure from car manufacturers to cut prices.

Dana said on Wednesday that it had sued Chrysler LLC in an attempt to strike a "market-competitive agreement" and was prepared to stop supplying the struggling No. 3 automaker next year if negotiations break down.

"We have a business today which is in a significant loss and we need to address that," Executive Chairman John Devine said on a conference call. "We're not looking to end our relationship with Chrysler. Our intent with Chrysler is to have a good, long-term relationship."

Dana said it needed to slash about 3,000 jobs over the course of 2008, including the planned reduction of 500 salaried positions announced last week. It expects to make most of the cuts in the third quarter.

"For the near term, we continue to scale our North American operations -- through facility consolidations and workforce reductions -- to reflect a market that's very different than what was expected just six months ago," Chief Executive Gary Convis said.

Convis said the company had lowered its 2008 revenue outlook to a range of $8.6 billion to $8.8 billion from its earlier forecast of $9 billion and would focus on downsizing the North American business in the wake of falling demand.

Dana's second-quarter net loss widened to $140 million, or $1.47 per share, from $133 million, or 89 cents per share, a year earlier.

Revenue rose 2 percent to $2.3 billion.

The Toledo, Ohio-based supplier makes axles, driveshafts and other parts and currently employees about 35,000 people.

Dana shares were down 2.2 percent at $5.86 in morning New York Stock Exchange trade.

(Editing by Lisa Von Ahn)