Chrysler considers several new partnership possibilities

“Falling trade-in equity, fewer leasing options, credit market restructuring and the increased migration to used vehicles are all putting added pressure on the U.S. new-vehicle sales market in 2009,” according to a new report from J.D. Power & Associates, which now expects to drop to 13.2 million units in the United States in 2009.

The value of GM’s stock dropped 45 percent last week as investors, such as Citibank reduced their holdings of the troubled automaker. Citibank cut its holdings to three percent from five percent on fears that GM would face a continuing drain on its resources as auto sales plunged.

A Chrysler official put the chances of a deal with GM at about “50-50.” But a key UAW official said neither company had approached the UAW.

In June, Chrysler officials said the company would try to eliminate 1,000 salaried jobs through retirements and buyouts.

However, the company also warned that it might be forced to use “involuntary separations” if not enough salaried employees volunteered to leave.

Chrysler has eliminated 22,000 jobs since February 2007 and now has approximately 66,000 employees, including more than 8,000 in Auburn Hills. It is planning to eliminate another 4,000 jobs during 2009.

Chrysler, as a private company, does not release quarterly financial information but GM lost 15.5 billion in the second quarter and is expected to post additional losses when it posts its third quarter results at the end of October.

One major benefit of the merger for GM is that it would remain the world’s largest automaker.

Japan’s Toyota Motor Corp. is poised to take over the crown at the end of the year but a merger would leave the crown in GM’s hands.

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 Chrysler considers several new partnership possibilities 
Doug Quigley, an executive with Chrysler LLC’s Product Engineering unit, speaks during the unveiling of three advanced Electric-drive Vehicle (EV) prototypes, including the two-seater Dodge EV, right, and Jeep EV outside Chrysler’s headquarters in Auburn Hills, Michigan, U.S., on Tuesday, Sept. 23. (Bloomberg News)

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