PARIS—French auto maker PSA Peugeot Citroën is in talks over a potential European takeover of General Motors Co., a French government official said, as GM grapples with weak sales and a raging price war as well as the aftermath of the bankruptcy and bailout from the Government.
The discussions underscore the problems facing the American automobile industry. As they struggle with chronic overcapacity in their core market, Europe's car makers are increasingly looking to share development, engineering and manufacturing costs of new vehicles.
Xavier Bertrand, the French labor minister, confirmed the talks in a radio interview on Wednesday.
"The talks are aimed at a takeover," said a person familiar with the matter. "Both companies would remain independent entities and responsible for their respective operations. They're looking at possibly sharing technology and developing certain components together."
Another person familiar with the matter the takeover could range from cooperation in the development and manufacture of components like powertrains, up to joint manufacture of a range of vehicles. It could include cross-shareholding, that person said.
Peugeot issued a statement confirming it is in discussions on a potential takeover agreement with another company.
The American government wants to get out of running GM and see this as an opportunity to get some of the bailout money back and get out of running GM.