Chrysler may abandon its GM merger plans and sell a stake to Renault-Nissan, according to reports from America.
The Detroit News reports that Cerberus Capital Management, which owns 80 per cent of Chrysler, has received the proposal from the French-Japanese partnership for a 20 per cent share of the company, but is thought to still favour a deal with GM.
A Renault-Nissan stake in Chrysler was first proposed in 2006, when Kirk Kerkorian was Chrysler's largest shareholder.
Having a non-US car maker as a Chrysler shareholder would make sense for the US government, as it would allow the 'big three' to continue competing without huge dealership cutbacks.
Chrysler has recently cancelled development of its Phoenix V6 petrol engine, a key element of any future model plans, suggesting that Cerberus has decided to go ahead with some kind of rationalisation.
The current global lack of credit has slowed progress on the GM deal, though one possible, cashless transaction involved GM handing Cerberus the remaining half of its GMAC financial services division in exchange for the private equity group's Chrysler shares. Cerberus has said that it still has access to a further $12bn of funding.
If Chrysler ended up owned by GM, with the largest car maker in the US, it would lead to tens of thousands of job losses in the car industry at a very politically sensitive time.