Page last updated at 05:41 GMT, Saturday, 11 October 2008 06:41 UK

GM and Chrysler 'in merger talks'

Chrysler plant in Michigan. File pic
Chrysler is the No3 maker in the United States, and GM the No1

US car giants General Motors and Chrysler are in talks about a possible merger, US media say.

Reports say the talks have been going on for a month but details of the deal vary from a merger to an acquisition by GM of Chrysler.

GM is the leading manufacturer and Chrysler third after Ford. All have been suffering with a plunge in US sales to 15-year lows.

Neither of the parties have made any direct official comment.

Ford move

Sources told the Wall Street Journal that Cerberus Capital Management, which owns 80.1% of Chrysler had proposed trading its automotive operations to GM in return for GM's stake in the auto lender GMAC Financial Services.

The New York Times's sources spoke of a merger that was a "50-50" possibility, although it could take weeks to finalise and had been stalled by the turmoil in the financial markets.

GM spokesman Tony Cervone said: "Without referencing this specific rumour, as we've often said, GM officials routinely discuss issues of mutual interest with other automakers."

Analysts have questioned Chrysler's position, given its reliance on North America for 90% of its revenue.

Both companies have been hard hit by falling truck and SUV sales and are struggling to push through job cuts against union opposition.

GM shares hit a 60-year low this week. It posted a second-quarter net loss of $15.5bn.

Separately, Reuters reports that Ford is planning to sell most of its 33.4% holding in Japan's Mazda.

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