Financial salvation for the Big Three automakers lies with more fuel-efficient cars, according to a University study released Monday.

The study, authored by Walter McManus, a scientist at the University's Transportation Research Institute, found that Ford, General Motors and DaimlerChrysler could increase combined profits by up to $2 billion in the 2010 model year by aggressively building cars that go above and beyond federal standards for fuel efficiency. That's almost two-thirds of General Motors 2005 loss of $3.4 billion.

If the companies choose to only meet the federal standards, they could lose up to $3.6 billion in profit, the study says.

American automakers have struggled recently as rising gas prices have driven consumers away from the inefficient trucks and sport utility vehicles that formed the base of their business. Car buyers have increasingly looked to smaller Japanese cars that get better gas mileage.

In the latest sign of the Big Three's woes, Chrysler, the carmaker with the third-highest market share in America last year, announced Monday that it would slash its third-quarter production by 24 percent. This paves the way for Toyota, a Japanese firm, to move into third place at the end of the year, while Chrysler will drop to fourth. It also projected a $1.5 billion loss for its U.S. division in the same quarter.

"Even the Big Three now acknowledge that high gas prices and their overdependence on fuel-inefficient SUVs and pickup trucks have accelerated their financial freefall," McManus said in a written statement.

The study looks at three different potential gas prices: $3.10, $2.30 and $2. It argues that the Big Three automakers stand to increase revenues at all three levels, even if prices fall from their current national average of $2.50.

The major Japanese car companies would likely see little change in revenue because their products are already fuel-efficient.

Spokespeople from Ford and Chrysler said the companies are already working toward producing more fuel-efficient cars.

"Fuel economy has always been important," Chrysler spokesman Jason Vines said. "It's more important now than ever before."

Chrysler is collaborating with Mitsubishi and Hyundai on a new engine that would boost its cars' gas mileage substantially. The company also plans to introduce its first hybrid in 2008, a Dodge Durango SUV.

Ford, which recently announced plans to offer buyouts to all salaried employees and cut 10,000 salaried workers, also acknowledged the importance of producing cars that use less gas.

"We recognize the competitive advantage of building vehicles that are aligned with consumer demand, including vehicles that are fuel-efficient," Ford spokeswoman Kristen Kinley said in a written statement.

In June, Ford backed down from a pledge to produce 250,000 hybrid vehicles a year by the end of the decade. Instead, the company said it would focus more on alternative fuels like ethanol and bio-diesel.

The Big Three have often resisted calls to increase fuel economy because of the costs associated with developing new technology, choosing instead to promote trucks and SUVs.

But if the companies hope to survive, McManus said, that will need to change.

"Deploying new technologies takes time and money to accomplish, and time and money are in short supply in Detroit," he said. "While management is currently focused on cutting capacity through massive layoffs, they need to undertake a deep transformation to much more fuel-efficient fleets to avoid going under."

- Jessica Vosgerchian contributed to this report