Cerberus gets Bernhard to advise on Chrysler bid

FRANKFURT (Reuters) - Buyout firm Cerberus Capital Management LP (CBS.UL) has hired Chrysler's former chief operating officer to advise it on a possible bid for the U.S. carmaker, a source familiar with the matter said on Wednesday.

Turnaround expert Wolfgang Bernhard, a prime author of Chrysler's short-lived earnings rebound earlier this decade, has signed up with Cerberus, boosting its chances in the scrum to buy the loss-making DaimlerChrysler (DCXGn.DE) division, the source said.

Cerberus declined comment.

Cost-cutter Bernhard, 46, most recently worked at Volkswagen (VOWG.DE) before leaving in January amid a management reshuffle.

He joined VW after DaimlerChrysler unexpectedly ditched him in 2004 just before he was due to run its Mercedes Car Group premium arm. German labor leaders at DaimlerChrysler had opposed his arrival in Stuttgart.

Few industry executives know Chrysler as well as Bernhard, who worked in Detroit with then-Chrysler chief and now group Chief Executive Dieter Zetsche to close six Chrysler factories and cut its workforce by a fifth.

Cerberus is among a handful of firms that have emerged as frontrunners to bid for Chrysler, a source familiar with the matter told Reuters on Tuesday.

Another private equity consortium -- The Blackstone Group (BG.UL) with Centerbridge Partners -- is also in the running, as is Magna International Inc (MGa.TO), Canada's biggest auto parts maker, the source said.

Other potential buyers include private equity firm Ripplewood Holdings, a separate source familiar with the matter said last week.

General Motors (GM.N) is another potential buyer. In February, a source told Reuters that GM was in early talks to buy Chrysler.

Chrysler swung to an operating loss of nearly $1.5 billion last year as buyers shunned a model lineup that depended heavily on light trucks and sport utility vehicles at a time of high fuel prices.

DaimlerChrysler said last month it was examining its strategic options for Chrysler, which launched a restructuring plan that will cut 13,000 jobs and close a plant in North America as it tries to return to profit by 2008.

DaimlerChrysler has consistently declined to comment on the status of the review or say when a decision was due.