Chrysler-Cerberus Rumor Mill Churning

Chrysler-Cerberus Rumor Mill Churning

As Fortune magazine points out in its Jan. 4 issue, whispers about Chrysler and Cerberus are getting louder, with almost none of it positive.

The magazine’s senior editor, Alex Taylor III, notes that it was only five months ago that Cerberus Capital Management bought 80% of Chrysler from Germany's Daimler but already the vultures are circling.

Stock market pundit Jim Cramer has become the latest to forecast disaster for the struggling automaker. In the Jan. 7 issue of New York magazine, Cramer riffed on Chrysler's weakened condition and the skills of its CEO, Bob Nardelli of Home Depot, declaring: "Call the Chrysler failure [in 2008] a lock."

Cramer was only the latest to forecast impending disaster for private equity's first foray into the auto business. “The clamor grew so loud before Christmas that Cerberus, which usually maintains a stony public silence, felt compelled to put out a statement declaring that its board of directors was "highly complimentary" about Chrysler's progress and that the automaker is "not only meeting, but, in many cases, exceeding its financial targets," wrote Fortune.

So what’s the solution? Fortune says the possibility of a merger between Chrysler and Ford is being considered. “One scenario has it that Ford would keep Chrysler's Jeep brand and its Dodge and Chrysler minivans - and discard everything else.”

It's an unlikely scenario. More likely is a hook-up with a Chinese or Indian manufacturer.

Photo by Chrysler

Chrysler CEO Bob Nardelli addresses the media

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.