Car market decline spurs fresh ‘Big 3’ merger talk

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Paris, Oct 17Paris, Oct 17: Record low auto sales and the financial crisis are spurring fresh merger talk about the Big Three US automakers in a new global consolidation round while the sales rot is also impacting suppliers and car retailers.

Renault on Friday denied it was in talks to buy Jeep from Chrysler. People familiar with the talks said private equity firm Cerberus was in discussions to sell all or part of Chrysler LLC’s operations to the French firm and General Motors Corp as it considers a range of deals that could break up the No. 3 U.S. automaker.

General Motors, Ford and Chrysler, seeking to maximize cash returns while battling with a declining home market due to high petrol prices and an economic recession, are expected to put brands both in the United States and overseas up for sale or to seek tie-ups to slash production costs.

“There are no discussions. We are focusing on dealing with the current market situation,” Renault spokeswoman Frederique Le Greves told Reuters.

Renault has named Patrick Pelata as chief operating officer to leave more time to chief executive Carlos Ghosn to focus on strategy, including mergers and acquisitions.Ghosn is also chief executive at Renault’s 44 percent Japanese subsidiary and alliance partner Nissan Motor.A spokesman for Nissan declined comment on any talks.Ghosn has never hidden his desire to see Renault return to the United Sates but the focus of expansion was on emerging markets such as China. He said recently that the situation on the U.S. car market meant that “something will have to happen” and that any big deals would be opportunity driven.

The sources said that Renault had expressed an

interest in Chrysler that

has spanned possibilities from an alliance to an acquisition of Jeep, widely considered to be Chrysler’s most valuable brand.

Any deal with Renault to buy Jeep would put the world’s first and best-known sport utility brand back in the hands of the French automaker that sold it to Chrysler along with American Motors in 1987.

Chrysler assets under consideration for purchase by GM include its top-selling minivan line, a market segment Chrysler pioneered almost 25 years ago, and its truck production facilities in Mexico, one of the sources said.

Cerberus’s talks with GM also have included the possibility of Chrysler buying GM’s remaining 49 per cent share of GMAC. In one scenario, GM would swap its GMAC stake for Chrysler’s auto operations, sources have said.