Chrysler says no brand sales, "not going under"

DETROIT (Reuters) - Chrysler LLC said on Wednesday it would not sell off brands like Jeep or any U.S. assembly plants, but hoped to sell equipment used to make the once-popular PT Cruiser as it works to shore up its cash position after a $4 billion government bailout.

Chrysler Vice Chairman Tom LaSorda said he could not say whether Chrysler's owner, private equity firm Cerberus Capital Management, was shopping the automaker to potential buyers at a time when auto sales are tumbling.

"Those things are all dealt with at the Cerberus level, and at this point in time I just can't speak to that," he said.

"This company is going to be around," he added. "We are not going under."

LaSorda, speaking to reporters, was responding to a Reuters report on Tuesday citing people with knowledge of the talks as saying Chrysler had discussed selling assets to Renault-Nissan and Canadian auto parts maker Magna International.

Three people with direct knowledge of the discussions said on Wednesday that contacts had continued in recent weeks between representatives of Cerberus and Renault-Nissan.

While they were not authorized to publicly discuss the talks, one said the matter appeared to have become more sensitive because of the U.S. government aid for Chrysler and the foreign status of its potential partners.

Chrysler confirmed that it would look to sell the tooling to make the PT Cruiser after the model is phased out this summer, as Reuters reported on Tuesday.

Analysts have questioned whether Chrysler, which burned through $9 billion in the second half of last year to end 2008 with $2 billion cash, can survive without a merger partner.

Chrysler faces both mounting pressure and new scrutiny from government officials who need to approve any asset sale of more than $100 million, they said.

"I'm sure there are a lot of things on the table and no decisions have been made," said independent analyst Erich Merkle. "What is clear is that something has to be done."

RELUCTANT GHOSN

LaSorda said Chrysler had not had talks with Renault SA, which owns a 44 percent interest in Nissan.

Renault also denied any such talks had taken place.

Cerberus, which operates Chrysler as one of the companies in its portfolio of over 30 firms, had no comment on Wednesday. Nissan Motor Co Ltd also had no comment.

Renault-Nissan had contact with Chrysler about a sale of all or parts of the U.S. automaker last year, people familiar with those talks have said.

The earlier round of Chrysler talks with representatives of the Renault-Nissan alliance led by Carlos Ghosn came before Cerberus tried to broker a now-scrapped merger of Chrysler with General Motors Corp.

"Chrysler itself does not make these decisions," said David Cole, chairman at the Center for Automotive Research. "I don't think Cerberus is in love in being in the car business. These kinds of merger discussions are extraordinarily confidential."

A fourth person with direct knowledge of the matter also said late on Tuesday that Ghosn had become more reluctant to acquire a new brand in the current slump.

Ghosn has repeatedly ruled out any deal involving cash.

Renault shares dropped 7 percent after the Reuters report, while Nissan shares closed up almost 4 percent in Tokyo.

Chrysler, which was acquired by Cerberus in 2007, suffered a 30 percent fall in sales last year and has been forced to throttle back on new investment.

It also shut all 30 of its U.S. plants for a month from the middle of December, and plans to seek another $3 billion in U.S. government aid.

Sen. Bob Corker, a Tennessee Republican and one of the auto industry's most outspoken critics, said on Tuesday that Chrysler could be made more viable through a merger.

Chrysler's LaSorda disclosed on Wednesday that the company had been in talks last year with Magna and Russian carmaker GAZ about making vehicles in Russia based on the platform for the Dodge Caliber and Jeep Patriot. Those models are now made in its Belvidere, Illinois, plant.

LaSorda said on Wednesday those talks could be revived.

Magna was one of the bidders for Chrysler when it was sold by former owner Daimler AG in 2007.

Expectations that Magna could be interested in a new deal with Chrysler were boosted when Magna confirmed on Tuesday that it had hired former Chrysler executive Wolfgang Bernhard as an adviser.

Bernhard was seen as a front-runner to take over as CEO of Chrysler before Cerberus gave the job to Bob Nardelli. LaSorda said he had been in contact with Bernhard in his new role.

But LaSorda said there was no consideration of Magna running Chrysler's U.S. plants.

Two sources familiar with the discussions said on Wednesday that preliminary talks with Magna about operating Chrysler plants had taken place, although it was not clear how any deal could be structured or whether it could be completed.

Separately, LaSorda said Chrysler was looking for buyers for tooling equipment for models being phased out such as the PT Cruiser. He said he would consider a licensing deal with another automaker to build one of Chrysler's current vehicles.

People familiar with the discussions also told Reuters on Tuesday that Chrysler had been in early talks with Chinese automakers and seeking over $100 million for the PT Cruiser tooling. LaSorda said on Wednesday no purchase proposal from an Asian automaker had been submitted for the equipment.

(Reporting by Poornima Gupta, Soyoung Kim, Ran Kim and Kevin Krolicki in Detroit, Yang Fan in Shanghai and Pascale Denis in Paris; editing by Peter Bohan and Ted Kerr)