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The whispering about Detroit's only private automaker is getting louder, and almost none of it is positive.

By Alex Taylor III, Fortune senior editor

(Fortune) -- 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 January 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."

Of course, Cramer makes pronouncements with the same frequency - and credibility - as politicians who promise higher services and lower taxes. But he 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."

Cerberus' statement did nothing to dampen the Detroit rumor mill, where the activities of private-equity guys from New York are the subject of intense speculation. Take fleet sales. So weak is Chrysler's current product lineup - and so out of sync with the market - that competitors figure that an unusually large chunk of its car and truck production is being dumped into fleets.

Others are even pondering the possibility of a merger between Chrysler and Detroit's other weak sister - Ford (F, Fortune 500). One scenario has it that Ford would keep Chrysler's Jeep brand and its Dodge and Chrysler minivans - and discard everything else.


Continued here:

The Chrysler rumor mill - Jan. 4, 2008
 
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