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General Motors is in ongoing talks with DaimlerChrysler [DCX
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] about the devleopment of a large sports utility vehicle, but it is unlikely to be interested in buying Daimler's Chrysler unit, industry sources say.
The sources dismiss reports of ongoing takeover talks between the two and say GM would have no interest in such an acquisition. The two companies, however, are interested in the cost savings that could come with a vehicle development deal.
Speculation about the future of Chrysler started earlier this week when DaimlerChrysler CEO Dieter Zetsche revealed the future of the money-losing Chrysler division was being studied, and that the company was open to all options. That could include a spin off, analysts say.
Zetsche made the comments as he announced a major restructuring of Chrysler Wednesday that will result in 13,000 layoffs and plant closings. Rumors that GM could step in to forge an alliance with Chrysler began to circulate immediately.
Trade publication Automotive News said Friday high-level talks were taking place between GM and DaimlerChrysler executives, citing anonymous sources in the U.S. and Germany.
"I would not go with this bet," said Dutch Mandel of AutoWeek.
General Motors and Chrysler both declined comment.
DaimlerChrysler said last Wednesday that fourth-quarter earnings fell 40% from a year ago and also reported a 2006 operating loss of $1.8 billion. Demand for Chrysler vehicles remains poor; the division saw sales decline 7% in the fourth quarter and spoiled a solid quarter for Mercedes, which recorded sales growth of 5%.
Spinoff speculation continued to push up shares of DaimlerChrysler, however, with the stock closing Friday up more than 4% on heavy trading on the New York Stock Exchange. Shares also rose in earlier trading in Europe, closing up 4% in Frankfurt.
GM shares [GM
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] closed Friday down slightly.
The smallest of the "Big Three" group of U.S. automakers, DaimlerChrysler was formed in 1998 following Daimler-Benz AG's $37 billion acquisition of Chrysler Corp.
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