U.S. auto giant General Motors is reported to be in preliminary talks with Chrysler about a possible merger.
The New York Times and The Wall Street Journal cite people familiar with the discussions. They say the talks began last month between GM and Cerberus Capital Management, a private equity firm that owns Chrysler.
The possible merger could reduce the so-called "Big Three" automakers of Detroit to the Big Two. Ford is also based in Detroit.
The New York Times reports Cerberus is also in talks with other automakers, including Nissan and Renault.
The global financial crisis has increased fears the Unites States' biggest automakers could be forced into bankruptcy. Car sales have fallen sharply and analysts say potential car buyers cannot get loans.
Some information for this report was provided by AP.