UPDATE 1-ArvinMeritor cutting 1,250 jobs, reviewing spinoff

* Cutting 1,250 jobs, or 7 percent of global workforce

* Reviewing spin-off of car-parts unit to shareholders

* Cites difficult market conditions

DETROIT, Oct 31 (Reuters) - Car and truck parts maker ArvinMeritor Inc ARM.N is cutting 7 percent of its workforce and said it is reviewing alternatives to a previously planned spin-off of its car parts unit to shareholders because of difficult market conditions.

ArvinMeritor in May announced a plan to spin off its light vehicle business to shareholders under the name "Arvin Innovation Inc," contingent on satisfactory financial and automotive market conditions.

The supplier said on Friday it was investigating other options to separate the business, including a sale, although the spinoff remained an option.

"We continue to believe that separating our two business groups will unlock significant value for our shareowners ... but due to today's difficult environment we are pursuing additional approaches to achieve a separation," ArvinMeritor Chief Executive Chip McClure said in a statement.

ArvinMeritor also said it was reducing its global workforce by 1,250 employees, or about 7 percent. The cuts, which comprise 450 salaried and 800 hourly workers, have been mostly completed, it said.

The job reductions and other restructuring actions will save $125 million annually, ArvinMeritor said. (Reporting by Soyoung Kim; Editing by Steve Orlofsky)