General Motors will not put in a first-round bid for Chrysler, leaving only private equity and an automotive parts group in the frame for the US carmaker, The Times has learnt.

Proposals are due to be submitted to JPMorgan Chase, which is advising DaimlerChrysler, Chrysler’s owner, on Friday. However, sources close to the talks said that GM would not make a bid because it believes that it does not need any additional capacity.

GM is in the middle of a massive restructuring in an attempt to restore it to profitability and has cut production in the US. The world’s biggest carmaker recently reported a profit for the final quarter of last year — its first move into the black for two years.

GM was the only large carmaker to show any interest in Chrysler when the German/US company said that it was considering all options for the US division. All the other leading manufacturers expressly ruled themselves out.

However, it is understood that DaimlerChrylser had approached GM before it publicly put Chrysler up for sale and GM entered talks to explore any possibilities. Initially GM had thought that parts of the business, including Jeep and Dodge, were attractive.

It has been reported that GM made a bid for Chrysler in January but that the offer was rejected as too low by the parent group.

The bidders left in the race for Chrysler are Magna International, the Canadian parts group that is thought to be working with the private equity group Ripplewood; Cerberus, which has hired Wolfgang Bernhard, a former Chrysler chief operating officer; and a combination of Blackstone and Centerbridge.

Unions are likely to try to fight any takeover by private equity groups. But it is also thought that some of the private equity players, including Blackstone, are concerned about healthcare issues and the strength of the unions in the company. Chrysler has yet to negotiate new healthcare terms with the United Auto Workers Union, as Ford and GM have.

Some industry observers are also puzzled by the interest of private equity in Chrysler given the long lead time required by the car industry for product development and investment. The bidders may only go for a stake in the business rather than outright ownership. It has been speculated that a 25 per cent stake may be sold with a value of about $5 billion (£2.54 billion).

Chrysler lost $1.1 billion last year as it struggled with poor sales in the US and its performance reignited fears that it is dragging down the German operations. The marriage of Daimler and Chrysler, which was consecrated eight years ago, has long been criticised for being ill-conceived.

DaimlerChrysler will be under pressure to reveal details of the progress on the sale of the US division next Wednesday at its annual meeting. A full sales process will take several months.

Yesterday DaimlerChrysler said that it was delaying publication of its first quarter results from April 26 to May 15 to implement international reporting standards.

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