Chrysler's owners talk

DETROIT — Maybe Daimler wants to cut its losses on Chrysler, or Cerberus Capital Management wants to own the U.S. automaker outright. Whatever the motivation, the companies confirmed Wednesday that talks are under way for Daimler to sell its remaining 19.9 percent stake in Chrysler to the private equity firm.

Neither side would give further details, except Cerberus said it approached Daimler and, if the transaction is successful, "all existing industrial relationships between Daimler and Chrysler would continue."

The talks, reported earlier Wednesday in Germany's Manager Magazin, come amid a crisis in the U.S. auto industry with falling sales, billions in losses and a dramatic market shift away from trucks and sport utility vehicles to small, fuel-efficient cars. Chrysler LLC's U.S. sales are down 24 percent through August, the worst performance of any major automaker.

Analysts say it's a good time for Daimler of Stuttgart, Germany, to bail out, but it might be a bad time for Cerberus, which already is overexposed to U.S. economic problems, to spend more money on a losing operation.

"I can see why Daimler would want to exit," said Mark Warnsman, an auto analyst with Calyon Securities. "The only reason I could think that Cerberus would want more exposure is they're getting a very attractive price."

Cerberus Capital Management LP bought 80.1 percent of Chrysler from Daimler AG in August 2007 in a $7.4 billion deal. The sale ended a stormy nine-year partnership between Daimler and Chrysler of Auburn Hills, Mich., though the companies have continued to share diesel-engine and other technology.

Aaron Bragman, an auto analyst with the consulting company Global Insight, said Daimler might no longer want to deal with continued losses at Chrysler. Cerberus might want to buy the whole company to make reselling it easier, or a clause in the 2007 sale contract could be forcing Cerberus to buy Chrysler's stake under certain conditions.

"We can't imagine that Cerberus has a lot of free cash on hand to do this," Bragman said. "That kind of makes us think it was something they were forced into doing."