Chrysler Halves Its Dividend to 15 Cents a Share : Autos: The drop in its quarterly payout will save the firm $134 million.

In the latest signal of the immense financial pressure on the auto industry, Chrysler Corp. slashed its common stock dividend by half Thursday to 15 cents a share.

The action was expected on Wall Street, although some analysts believed that Chrysler should have cut more deeply into the quarterly payout. The action will save the auto maker about $134 million a year.

Earlier, General Motors Corp. cut its dividend to 40 cents a share from 75 cents. Ford Motor Co.’s board is being urged by analysts to take similar action at its next dividend meeting in April.

Each of the Big Three is expected to post big losses in the first quarter. Chrysler will lose about $500 million, including an operating loss of $180 million, said analyst David Garrity of Nomura Research Institute in New York.

Lee A. Iacocca, chairman of Chrysler, said last year that he would not reduce the dividend unless there was a nuclear war. But the sales and earnings collapse of the past several months have been the automotive equivalent.

“Reducing the dividend was the prudent and sensible thing to do in light of the dismal market conditions of the past few months,” said Robert S. Miller Jr., Chrysler’s vice chairman. “We still have long-term confidence in the business, however, so it would have been inappropriate to eliminate the dividend.”

Car and truck sales, weak for two years, had been expected to recover this year. But the decline in consumer confidence triggered by the Aug. 2 Iraqi invasion of Kuwait caused auto sales across the board to decline last fall and collapse in January.

With the conclusion of the Persian Gulf War, dealers and auto executives report some increase in sales and showroom traffic. Garrity said there could be a recovery as early as the second quarter.

“I can see a nice pop coming,” he said.

However, auto sales remain extremely weak, auto credit is hard to come by and consumer debt remains heavy. Chrysler itself is fighting a competitive onslaught against its most important products, its Jeeps and minivans.

Chrysler’s 30-cent dividend amounted to 18% of its operating cash flow, according to Garrity. Although that was less than either GM’s or Ford’s, it was still too high for a company in Chrysler’s predicament, he said.

The firm’s debt was recently downgraded to junk bond status by the major credit-rating firms, and it is renegotiating its $2.6-billion revolving credit line with a bank consortium to avoid falling out of compliance with terms of the loans.