DETROIT (Feb. 16) — General Motors is in negotiations to buy the struggling Chrysler group in its entirety, according to sources in Germany and the U.S.
High-level talks are taking place between DaimlerChrysler A.G. and GM executives, according to a report from Automotive News, a sister publication of Rubber & Plastics News.
Although the two companies have discussed cooperation on a large sport-utility vehicle, said sources at both companies, the potential deal would go beyond limited product development alliances.
Talk of an alliance was first reported last week in Germany's "Manager-Magazin. "
GM spokesman Tony Cervone declined to comment on the speculation, saying, "We have always said that conversations (between GM and many other parties) have happened all the time, and many times they don´t come to fruition."
A Chrysler spokesperson declined to comment. Other sources have reacted skeptically.
Asked about the possible deal, Klaus Franz, GM´s top union official in Europe, said acquiring Chrysler would be a "disaster" for the auto maker. Franz is vice chairman of the supervisory board at GM Europe´s Opel division, based in Germany.
"This is only a step to remain the No. 1 auto maker. The problem is that Chrysler is in the same situation as GM. They don´t have the right product portfolio," Franz said. "This would be comparable to GM´s alliance with Fiat. And GM lost a lot of money with that decision. I hope GM learned its lesson."
Roman Mathyssek, an analyst for Global Insight in London, also is skeptical of a purchase: "At the end of the day, if they were really to do that, that would not be a cheap option for DaimlerChrysler at the moment. It would be a lot more effective for the DaimlerChrysler group to look at how they can continue their cooperation."
Last week, uncertainty over Chrysler´s future increased as DaimlerChrysler CEO Dieter Zetsche said the company was open to all options for the Chrysler group, including a sale.
Chrysler unveiled a restructuring plan as it posted a $1.4 billion loss for 2006. That plan calls for cutting 13,000 jobs in North America by 2009.