Cerberus has acquired an 80.1 per cent stake in the ailing carmaker and its related finance business for $7.4bn (£3.7bn).

Daimler AG, the new name for the German carmaker, will retain a 19.1 per cent share in the company but the agreement must first be ratified by Daimler's supervisory board, which is due to meet later today.

Dieter Zetsche, DaimlerChrysler AG chairman, said: "We're confident that we've found the solution that will create the greatest overall value – both for Daimler and Chrysler .

“With this transaction, we have created the right conditions for a new start."

Chrysler's industrial business will transfer to Cerberus free of debt but the private equity firm will assume responsibility for pension and healthcare benefits, believed to be in the region of $18bn.

Cerberus emerged as the front runner from a three-way battle with Blackstone, another private equity group, and Magna International, a Canadian aftermarket company.

The deal marks one of the largest corporate names to fall into private equity hands.