ArvinMeritor withdraw outlook, to reorganize unit

DETROIT, Jan 8 (Reuters) - ArvinMeritor Inc (ARM.N) withdrew its first-quarter outlook on Thursday and said it had ended talks to sell its car parts unit due to difficult credit markets and a deep downturn in the auto industry.

ArvinMeritor, which make parts for cars and trucks, including wheels and chassis components, said the company would reorganize the car parts business and try to sell it off in pieces.

"In light of the unprecedented challenges in the credit markets and the volume weakness in our industry, we have determined that in this financial environment we cannot capture the appropriate value for (light vehicle business) by selling the business as a whole," ArvinMeritor Chief Executive Chip McClure said.

ArvinMeritor said late last year it was in negotiations to sell the unit, after dropping a initial plan to spin off the business to shareholders under the name of "Arvin Innovation."

Phil Martens, president of the car parts unit, is leaving the company immediately to pursue other opportunities, ArvinMeritor said.

ArvinMeritor shares fell 5.6 percent to close at $3.38 on the New York Stock Exchange.

The supplier also withdrew its 2009 fiscal first-quarter financial guidance, citing changes in strategy regarding the car parts unit.

ArvinMeritor had expected more than $1 billion in sales in the quarter and expected to generate $50 million to $58 million in earnings before interest, taxes, depreciation and amortization.

ArvinMeritor, like other U.S. auto parts suppliers, has suffered from the steep decline in vehicle production, tight credit markets and the difficulty of passing on higher commodity costs to automakers.

ArvinMeritor said earlier this week it was cutting base salaries of about 100 senior executives by 10 percent to conserve cash amid "worsening economic conditions."

The company, which is in the process of eliminating 1,500 jobs, also said it would cut the salaries of its 1,700 U.S. white-collar workers by 5 percent. (Reporting by Soyoung Kim; Editing by Andre Grenon)