New York: General Motors is in preliminary talks about a possible merger with Chrysler, a deal that could drastically remake the landscape of the US auto industry.

The talks between GM and Cerberus Capital Management, the private equity firm that owns Chrysler, began more than a month ago but the negotiations are not certain to produce a deal, the New York Times reported today.

It quoted two people "close to the process" as saying the chances of a merger were "50-50" as of yesterday and would most likely still take weeks to work out.

A merger, the paper said, would be a historic event, with two of the most iconic names in American industry coming together to survive in an increasingly difficult environment.

Both have roots dating back decades in Detroit and, with Ford, long dominated the auto industry until Japanese and other foreign car makers began making inroads into the American market, the paper noted.

The auto industry, the Times said, is being pummelled from all sides by high gas prices that have soured consumers on profitable SUVs, by a softening economy that has scared shoppers away from showrooms, and by tight credit that is making it difficult for willing buyers to obtain loans. Both GM and Chrysler have been struggling with product lineups that are out of sync with consumer demand for smaller, more fuel-efficient cars.
Source : PTI