General Motors is understood to be in talks with DaimlerChrysler that could lead to a bid for all or part of its under pressure US business.

An outright sale could be worth €10 billion (£6.7 billion), some analysts have predicted, but GM may opt to reject some of the Chrysler operation.

A merger of the two is likely to lead to heavy job losses and factory closures with the rationalisation of the two operations.

The talks are at an early stage, but GM is thought to be scrutinising the three Chrysler brands, believing that the two premium marques — Jeep and Dodge — are more attractive than the Chrysler badge, which concentrates on high-volume production.

GM is thought to covet Jeep because it is a truly global brand.

Investors believe that it is also unlikely that GM will want Chrysler’s finance arm because it sold its own finance division only last year.

DaimlerChrysler has only just appointed JP Morgan to look at the future for Chrysler and it is thought that negotiations between the two sides could take months.

Analysts are split about the merits of a takeover of Chrysler by GM, since both the US carmakers are struggling with overcapacity. However, some believe the move could be effective in cutting damaging competition in the US and North America and that it would enable streamlining of the businesses.

David Feinman, a fund manager with Havens Advisors, said that a merger would lead to thousands of job losses. He said: “The only one to benefit would be Daimler because they would get rid of Chrysler.”

When DaimlerChrysler put Chrysler into play on Wednesday after announcing that the US division had plunged to a €1.1 billion loss, some analysts speculated that an equity sale might be the result. But GM is understood to believe that there can be difficulties with equity stakes.

A deal to buy Chrysler would help GM retain its position as the world’s biggest carmaker. This year it is expected that it will be overtaken by Toyota as the Japanese manufacturer continues its growth in the North American markets.

It would also be a large milestone in the consolidation of the global automotive industry as all carmakers seek to reduce costs in the increasingly competitive market. It is only a few months ago that GM, led by Rick Wagoner, fended off an attempt by the dissident shareholder Kirk Kerkorian to force a merger with Renault-Nissan.

It is nine years since Daimler-Benz bought Chrysler in a merger that many industry observers thought was an ill-fitting match.

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