PSA Peugeot Citroen, Europe's second-largest carmaker after Volkswagen, is in advance talks on a possible alliance with the world's largest automaker General Motors, said French labour minister Xavier Bertrand.

The alliance, if concluded, would see the two carmakers join forces to build cars and components in Europe and save on production and parts costs.
Peugeot and GM's European loss-making unit Opel / Vauxhall will jointly develop engines, transmission systems and make vehicles, which would be sold under their respective brands, the Financial Times yesterday reported, citing two people familiar with the plan.

Responding to online newspaper La Tribune report that discussions with GM and Peugeot had been underway for months, Peugeot acknowledged that it was in talks with an unnamed partner for an alliance.

"There can be no certainty at this stage that these discussions will result in any agreement," the Paris-based company said, without elaborating.

Should the outcome of talks be positive, an alliance could be announced at the Geneva car show in the first week of March, said the newspaper reported.

General Motors had last week posted a record annual profit of $9.19 billion for 2011, but lost $747 million in Europe, of which, $562 million was lost during the fourth quarter alone, as economic conditions in Europe worsened. (See: GM posts largest profit in 103 years in 2011) http://www.domain-b.com/companies/companies_g/General_Motors/20120217_largest_profit_oneView.html