General Motors is in negotiations to buy the troubled Chrysler group, sources in Germany and the US have told Automotive News Europe (ANE).

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High-level talks are talking place between DaimlerChrysler and GM executives, according to the sources. The two companies have discussed cooperation on a large SUV, but sources at both companies said the potential deal would go beyond product-development alliances. Should GM go through with the deal, they would have a tough road ahead, analysts told ANE.


Klaus Franz, GM’s top union official in Europe, said the acquisition of Chrysler would be a “disaster”. “The problem is that Chrysler is in the same situation as GM,” Franz told Automotive News Europe. “They don’t have the right product portfolio.”


Last week DaimlerChrysler CEO Dieter Zetsche said the company was open to all options – including a sale – for the loss-making Chrysler group, which includes the Chrysler, Dodge and Jeep brands. DaimlerChrysler posted a $US7.28bn operating profit for 2006 but the Chrysler group posted a loss of $1.47b.


Both GM and DaimlerChrysler spokespersons declined to comment.

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