Peugeot and Citroen in talks to buy Opel

General Motors and PSA Group have confirmed that negotiations have begun to sell off Opel to PSA.

The sale, it is claimed by both parties, would improve both operational efficiency and profitability. But it could also pose complications for many Holden-badged Opel products in Australia, including the soon-to-be imported Opel Insignia-based Commodore.

PSA, which owns Peugeot, Citroen and the DS brand, already works with GM Europe's brand and shares production and development of some SUVs and people movers.

Combined, the Opel-PSA alliance would see the newly formed car maker take 16 per cent of the European car market, making it second only to the Volkswagen Group, which accounts for more than 24 per cent of Euro sales.

A deal, say industry commentators, could be announced in a matter of days.

Struggling Opel, which operates under the 'Vauxhall' marque in the UK and has several of its vehicles re-badged to Holdens in Australia, hasn't made a profit in years.

Last year, the GM Europe brand blamed the UK's Brexit for not breaking even and posting losses of $257 million (A$336 million).

In 2015, the losses were even worse, with Opel losing $813 million (A$1 billion). The last time the car maker turned a profit was back in 1999, losing almost $15 billion (A$20 billion) over sixteen years.

It's not the first time a tie-up between the two European giants has been attempted. Back in 2013 GM sold PSA a 7 per cent stake in Opel but further investment on behalf of the French group faltered.

The suggestion of a merger has already prompted a fierce response from Opel's German unions, who are expected to attempt to block the deal once the final terms have been evaluated.