General Motors Corp has asked the US government for roughly $US10 billion in an unprecedented rescue package to support its acquisition of Chrysler LLC from Cerberus Capital Management.
Government funding would reportedly include roughly $US3 billion in exchange for preferred stock in a merged automaker.
The US Treasury Department is considering a request for direct aid to facilitate the merger. Reuters news agency reports a decision could come this week.
GM has been in talks with Cerberus about buying Chrysler since last month.
GM could not be reached for comment. Cerberus and Chrysler had no comment.
A federal bailout is not without precedent: there was a $US1.5 billion bailout of Chrysler in 1980.
State of the industry
The auto industry employs more than 350,000 American workers.
A combined GM-Chrysler would have a stable of 11 brands, some 10,000 dealers and 97,000 union-represented factory workers.
Chrysler's US sales are down by 25% this year - almost twice the rate of decline for the overall market. GM sales were down almost 18% in September.
GM shares are down nearly 80% this year and its market value is below what it was in 1929.
