Rumors of a Fiat / PSA Peugeot-Citroen merger have been circulating for years, but a new report is giving credence to the speculation.

Rumors of a Fiat / PSA Peugeot-Citroen merger have been circulating for years, but a new report is giving credence to the speculation.

In a recent interview, Fiat CEO Sergio Marchionne told Automotive News he would "certainly take a look" at PSA. He also said Europe needs a giant automaker to tackle Volkswagen's massive 23.3 percent market share.

A day later, PSA's Frederic Saint-Geours commented they are "completely open" to an alliance "but you have to find the right partner."

Regardless of whether or not the two companies tie up, experts say both need to increase spending on research and development if they ever want to catch Volkswagen.

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