General Motors In Talks With Peugeot To Sell European Auto Business

While the confirmation of 'strategic initiatives' is a good sign, the statement further says that there can be no assurance that an agreement will be reached. The acquisition of GM's European operations would give a the PSA Group a significant lead in European markets. With brands like Peugeot, Citroen and DS already under its umbrella, the acquiring of GM's Opel and Vauxhall brands would give it a 16.3 per cent share of the European Passenger car market and this see itself vault to the second place ahead of Renault but behind Volkswagen AG.

Peugeot is all set to enter India and we've told you all about it. In fact, the company has already bought the Ambassador brand from Hindustan Motors for Rs. 80 crore and we wait to see what company's plans are with regards to this.

The French government, which owns 14 percent of PSA, could support a deal that would help PSA reach "critical mass," an economy ministry source told Reuters. The government will "give special attention to the impact in terms of jobs and the industrial impact of these initiatives," the source said. France is in the midst of a heated national election campaign.

It was not clear what price GM might want for the loss-making European business, or what structure a deal could take. GM and PSA have already shared production of commercial vans and developed common vehicle platforms, a relic of their last attempt to forge a broader alliance, which was unwound in 2013 with the sale of the U.S. carmaker's stake in PSA.

Since taking over as GM's CEO in January 2014, Barra has signed off on decisions to quit markets, including Russia and Indonesia, where GM lost money, pull the Chevrolet brand out of Europe, and slash sales to rental car fleets that long propped up U.S. market share with little or no profit.

GM's global market share slipped by 0.3 percentage points last year. Selling Opel and Vauxhall, which added almost 1 million cars to its sales, could mean abandoning the global volume race in which it is currently ranked third behind Volkswagen and Toyota Motor Corp, with just over 10 million vehicles delivered last year.

GM Europe has been a drag on the automaker's global profitability since 1999, the last year Opel and Vauxhall recorded a net profit. GM restructured its European operations over the past six years, shutting Opel factories in Belgium and Germany and withdrawing the Saab and Chevrolet brands from sale. Still, GM Europe failed to break even in 2016, as Barra had once promised it would, and the company said last week it did not expect profits in the operation until 2018.

GM had previously discussed a sale of its European auto business to Canadian parts maker Magna in the aftermath of the financial crisis, when GM was heading toward a U.S. government-led bankruptcy. But GM pulled the plug on the tentative deal in 2009.

Selling Opel would free up GM to invest more to develop vehicles for the North American and Chinese markets, where it makes nearly all of its automotive profits, as well as to expand new businesses.