GM and the French manufacturer are currently in advanced talks.

A surprising report claims General Motors and PSA Group are discussing a possible merger. Reuters is quoting “two sources with knowledge of the matter,” saying that currently the two auto giants are holding talks for a merger of German automaker Opel with PSA, owner of the Citroen, Peugeot, and DS brands.

A spokesman for the French company has confirmed the information to Reuters, saying PSA was in talks with its American partner to deepen partnership. “We are in discussions with Opel to expand upon our existing projects,” Bertrand Blaise told our source, declining further comments.

Reuters also contacted Opel for more information, but the manufacturer remains tight lipped. The French government, holding 14 percent of PSA, and a spokesman for the Peugeot family, which holds a matching stake in the brand, were also not immediately available for comment. Currently, Opel and PSA are working together on a family of SUVs, including the Crossland X, the current 3008 and 5008, and the upcoming Grandland X.

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“I can see why GM may possibly seek to sell its European division, which hasn’t made money in many years,” George Galliers, an analyst with Evercore ISI, commented. “It is less clear why Peugeot would be interested in buying GM’s assets. The purchase would give them capacity in Germany, one of the most expensive countries to produce cars and would lead to excess capacity.”

2017 Peugeot 3008 GT
2017 Opel Crossland X

This is not the first rumor for a major merger of PSA with other manufacturer in the recent years, as back in 2015 it was speculated the French automaker could combine with Fiat Chrysler Automobiles. A couple of months before that, GM was reported as a potential partner of FCA.

More information on the possible deal is expected in the coming days, so stay tuned.

Source: Reuters and Bloomberg