Chrysler says still moving ahead with new engine

DETROIT (Reuters) - Chrysler LLC is moving ahead with investment in a more fuel-efficient V-6 engine program, a senior executive said on Wednesday, declining to comment on the automaker's merger talks with General Motors Corp. (GM.N: Quote, Profile, Research, Stock Buzz)

"The Phoenix engine program is going forward full steam," Chrysler President Jim Press told reporters. "It's a great engine. We're driving the prototypes today."

Chrysler announced plans to invest roughly $3 billion in the new engine program in 2007, just on the cusp of its acquisition by Cerberus Capital Management.

With Cerberus shopping Chrysler to potential buyers, including GM, according to people familiar with those negotiations, speculation has grown that the engine could be put on hold.

Press added: "There's not a lot of reason to talk about mergers and things like that because it's all speculation."

When asked directly whether Cerberus was meeting with potential bidders for Chrysler, Press declined to comment.

"I can't really talk about that," he said.