Tuesday 14 February 2017 12:43 pm

Peugeot-maker PSA confirms it’s in talks to buy rival Opel from General Motors

French car firm PSA has confirmed it's in talks to acquire rival European carmaker Opel from General Motors.

Any new combined company would overtake Renault to become the second largest European carmaker after Volkswagen.

In a statement, the company, which controls Peugeot, DS and Citroen, confirmed that "it is exploring numerous strategic initiatives aiming at improving its profitability and operational efficiency, including a potential acquisition of Opel".

The discussions would include Opel's UK affiliate Vauxhall too. The combined companies would take over 16 per cent of the European car market share; second to Volkswagen's 24.1 per cent on last year's data.

Shares in the French company were up 5.3 per cent in lunchtime trading.

PSA said:

Since 2012, General Motors and PSA Group have been implementing an Alliance covering, to date, three projects in Europe and generating substantial synergies for the two groups.

Within this framework, General Motors and PSA Group regularly examine additional expansion and cooperation possibilities, as well.

It added that there can be "no assurance" that an agreement will be reached.

PSA and GM already share production of both SUVs and minivans. Back in December 2013, GM sold its seven per cent stake in PSA after an alliance on a number of projects to make cost savings stalled. It had originally been forecast that the alliance would result in cost savings of $2bn by 2018.

The French government and the Peugeot family both hold 14 per cent stakes in PSA.

The confirmation of talks comes a week after GM reported a loss of $257m from its European operations – narrower than 2015's $813m figure, but still marking its sixteenth consecutive year of European losses.

Net profit for the whole of GM dropped 2.7 per cent last year to $9.43bn after foreign exchange losses.

A GM spokesman said the company concurred with PSA's statement.