New York - Amidst merger talks between struggling US auto leader General Motors and the third-largest US automaker Chrysler, the Wall Street Journal reported Monday that up to 40,000 jobs could be sacrificed in the deal.

The report quoted unnamed insiders.

Meanwhile, the possible deal faced new problems in the search for finance for the merger. The companies could approach the US government for support, in exchange for a government stake in the new company, the Journal reported, joining the growing trend as the government bails out Wall Street and the banking industry to the tune of 700 billion dollars.

A fusion of the two companies would result in the world's largest automaker, displacing Toyota from its newly-won first place. In the US, the new company would command about one-third of the market, inviting special scrutiny from antitrust officials.

GM is currently burning through about 1 billion dollars a month, and is interested in GM's cash reserves of nearly 12 billion dollars, a Detroit newspaper reported Saturday.

Chrysler and GM were pressing forward with merger talks, with a view to concluding them before November 4 presidential elections, the Detroit News reported Saturday.

Added pressure for a deal is coming from private investor Cerberus, which owns 80 per cent of Chrysler. German auto group Daimler still holds 20 per cent of Chrysler.

In the past three and a half years, GM has lost 66 billion dollars. The next quarterly report is due in the coming weeks.

Some GM managers, including chairman and CEO Rick Wagoner, are worried about a merger of two money-losing auto manufacturers, the Detroit News reported Saturday. Still in play is the possibility of a Chrysler merger with the French Renault-Nissan.

GM has reportedly started looking for a buyer of its gaz-guzzling Hummer sport utility vehicle unit. Hummer sales are down 47 per cent this year so far, dragged down by high gas prices.

Economist Peter Morici of the University of Maryland outside Washington DC Monday suggested the ideal solution would be for GM to buy up Chrysler's best brands - Jeep and Chrysler minivans - and let Chrysler reorganize under Chapter 11 bankruptcy. (dpa)