Chrysler, GM run to ink merger deal before US election

UNITED States auto makers Chrysler LLC and General Motors Corp are pushing for a quick merger deal ahead of the US presidential election as sales continue to plummet and they cannot gain access to credit, a Detroit newspaper reported on Saturday.

According to The Detroit News, senior executives at GM and private equity group Cerberus Capital Management, which bought an 80.1 percent stake in Chrysler from Daimler AG for US$7.2 billion in August 2007, are keen to wrap up talks before both auto makers are weakened further by a sluggish US economy.

Both companies have been losing money. Analysts have estimated that GM is burning through at least US$1 billion per month. The credit crunch and the economy have made major banks reluctant to lend to the industry.

A Chrysler spokeswoman said the company would not comment on the newspaper report.

Both parties are racing to conclude a deal before the election, which is 15 days away on November 4.

There has been speculation within the industry and among analysts that if Detroit's auto makers face failure, they may seek a bailout from the US government along the lines of the recent US$700 billion package for the financial sector.

It is unclear whether the government would support such a rescue package, but both presidential candidates - Democratic Senator Barack Obama of Illinois and Republican Senator John McCain of Arizona - may be more likely to promise help for the industry before Americans head to the polls.

The US auto industry accounts for thousands of jobs in Michigan and Ohio, and the latter remains a key battleground state in the upcoming election.

The newspaper report said under one possible scenario, GM would absorb Chrysler to get hold of its cash stockpile - US$11.7 billion on June 30 - then shut down some of its brands and car dealerships to cut costs dramatically.