Chrysler LLC is in talks with Tata Motors Ltd. and Fiat for a possible tie up as it seeks to raise cash and open doors to faster growing markets outside of the USA, sources briefed on the talks said on wedensday.

Chrysler is the third largest Automaker in USA and is controlled by a private equity firm Cerberus Capital Management LP these days. The company has been in discussions with Tata about arrangements to sell its Jeep Wrangler SUV’s in India and possiblr other Asian markets.

The company is also in talks with Fiat Spa about leasing its production capacity in North America and co-operating in retail distribution in the US market. This could be a win-win situation for both automakers since Fiat Spa is eyeing a comeback in US, the world’s largest car market, without major investment while allowing Chrysler to cut costs at a time when sales are low down and it faces a liquidity crunch due to mounting and losses low sales.

Fiat Chief Executive Sergio Marchionne widely acknowledged as the man behind the Fiat and its sister brands like Alfa Romeo, Lancia, turnaround has said Fiat would decide by year-end on the terms of its return to the North American market.

Tata is already in talks with Chrusler over sales of its battery powered mini-truck, the Ace for the US market. The tie up with Tata opens up a new market for Wrangler, the best selling model from the brand widely seens as Chrysler’s strongest. Chrysler could also use its tie up with Tata to sell the armoured version of the Jeep Wrangler already in production in Cairo to be used by troops to the Indian Military.

Like its larger rivals General Motors Corp and Ford, Chrysler has faced scrutiny over its liquidity because of the sharp decline in sales. Chrysler lost $1.6 billion in 2007 and the holding company that includes both the automaker and its financing unit, Chrysler Financial, lost $509 million in the first quarter.

Fitch Ratings on Tuesday downgraded Chrysler, warning that the automaker could run below the “minimum required levels” of cash to finance operations by the second half of 2009 if industry-wide sales remain flat or worsen.