Peugeot Citroen in alliance talks with GM image

PSA Peugeot Citroen, Europe’s No. 2 automaker said it’s in talks about possible cooperations and alliances with General Motors Co. (GM) of the U.S. according to an unsourced report Tuesday in La Tribune, a French online business-information website.

The tie-up would see them join forces to build cars and components in Europe, according to two people familiar with the plan.

“In the context of its globalization strategy and improving its operational performance, PSA Peugeot Citroen looks at potential cooperations and alliances,” the company said in an e-mailed statement.

“Discussions are taking place and there can be no certainty at this stage that these discussions will result in any agreement.”

French online newspaper LaTribune.fr reported late on Tuesday that PSA was in advanced alliance talks with US peer General Motors, although no agreement had been reached, citing an unnamed source.

General Motors had no immediate comment on the report. Peugeot was not immediately available for comment.

Last week, Peugeot Citroen, Europe’s second-largest automotive group by volume after Germany’s Volkswagen AG , said its automotive division had operating losses in 2011 and had burned through EUR1.65 billion of cash as it grappled with weak sales and a raging price war in Europe in the small-vehicles segment on which it relies for most of its sales.

On the same time, General Motors (GM) said it made $8.3bn (£5.3bn) of profits globally in 2011 but that its European operations lost $700m (£447m) and current restructuring needs to go further.

GM has already slashed its European workforce to save costs, but the company may look to close plants in the U.K. and Germany. Analysts predict GM could cut anywhere from 3000 to 5000 jobs in the next year and a half.