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In August 2007, Cerberus Capital Management took control of the American car portion of DaimlerChrysler, ending a nine-year trans-Atlantic merger. Chrysler became the first American automobile company to be privately held in a half century.

The merger had been meant to bring two of the oldest names in the automotive business together as equals, and to create a global powerhouse. But the 1998 arrangement did not turn out that way. For one thing, it quickly became apparent that the merger of equals was really a German takeover of the longtime No. 3 American carmaker. For another, the savings and increased marketing power both sides envisioned never really materialized.

And the hefty profits that attracted Daimler-Benz in the first place, particularly from Chrysler's minivans and Jeeps, gave way to a series of roller-coaster years, in which large profits were followed by strings of losses. In 2006, Chrysler posted a $1.5 billion loss and fell to fourth place in the American market behind Toyota.

In February 2007, Daimler announced that it was considering all options for Chrysler, including a sale, and laid out a restructuring plan that would involve cutting 13,000 jobs, or 16 percent of its work force. In the bidding that followed, the winner was Cerberus, which paid $7.4 billion, mostly in the form of investments in Chrysler, for an 80.1 percent stake in the new company, renamed Chrysler LLC. Only days after the deal was final, Cerberus installed Robert L. Nardelli, the former chief executive at Home Depot, as its new chief executive, even though Mr. Nardelli had no previous automotive experience.

Mr. Nardelli proved unable to reverse a steady decline in the fortunes at the company, the smallest of Detroit's Big Three. While overall auto sales in the United States fell 12.8 percent in 2008, Chrysler's fell 25 percent, mainly because of its focus on gas-guzzling sport utility vehicles and pickup trucks.

In the fall of 2008, Chrysler began a search for a merger partner, talking with the Japanese automaker Nissan Motor and its French partner, Renault, about bringing Chrysler into their international automotive alliance. The effort soon focused on the idea of a merger with G.M., but the talks were put on hold while both companies sought government funds to prevent their imminent failure. In December 2008, Chrysler received a $4 billion loan from the federal government to help it avoid bankruptcy.

On Jan. 20, 2009, the Italian automaker Fiat agreed to take a 35 percent stake in Chrysler. The deal meant that Chrysler would have significant foreign ownership again after only 18 months as an independent company. The agreement would allow Chrysler to use Fiat's technology and vehicle platforms to build more fuel-efficient, small and midsize cars at its factories and sell them in North America. Fiat will give Chrysler access to distribution networks in other parts of the world, particularly Europe. The companies said they expected "substantial cost savings opportunities" but did not specify an amount.

On March 30, President Obama said that he had told Chrysler that it would not be eligible for further taxpayer aid unless it completed a partnership deal with Fiat within 30 days. Administration officials said they had concluded that Chrysler was no longer viable as a stand-alone company.

On April 26, leaders of the U.A.W. said that they had reached an agreement with Chrysler that meets federal requirements for the automaker to receive more financing. And the large banks that held 70 percent of Chrysler's debt agreed to a Treasury Department demand that they accept roughly 22.5 cents on the dollar. But after the banks and hedge funds that held the rest of the debt refused to go along, Chrysler sought Chapter 11 protection, filing for bankruptcy on April 30, 2009, becoming the first American carmaker to do so since Studebaker in 1933.

The reorganized company has the U.A.W. as the largest stockholder; Fiat and the United States both hold stakes.

Sergio Marchionne, who runs both Chrysler and its Italian owner Fiat, has set to work to upgrade Chrysler's aging model line. But the company benefited from the industry's general rebound and the deep cost-cutting forced by bankrupty, and by the summer of 2010 it, too, was hiring new workers.

In May 2011, Chrysler announced it had paid back $7.6 billion in loans from the American and Canadian governments, paving the way for Fiat to increase its ownership stake to 46 percent, from 30 percent. Fiat will most likely increase its ownership to 51 percent by the end of 2011.

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