In an interview with radio station Europe1 on Tuesday, French Labor Minister Xavier Bertrand revealed that PSA Peugeot-Citroen CEO Philippe Varin informed the government that the automaker is talking to General Motors about forming an alliance.

Reuters reported that GM, which is the world’s number one automaker, and the PSA Group, which is the second largest carmaker in Europe, are not discussing a merger, but sharing vehicles and parts. Furthermore, any capital exchange between them would be minimal and purely symbolic.

This alliance may be the solution GM is looking for its troubled European division. If the tie-up goes ahead, then Opel, Vauxhall, Peugeot and Citroen will jointly develop new platforms, powertrains and complete vehicles, significantly reducing costs for all involved parties.

In return, GM would offer the French group better access to countries where it already has a strong presence, like China, helping reduce its dependence on the faltering European market. French newspaper La Tribune has also said that GM could facilitate PSA’s return to the U.S., from which it has been absent since 1992.

Frankfurt-based Commerzbank analyst Sascha Gommel said that such an alliance would prove beneficial for both parties: “A partnership with GM would make sense, because Peugeot and Opel both lack scale. Peugeot is in a difficult situation because companies like VW and Renault-Nissan can produce much higher volumes and so have a scale advantage.”

Mind you, PSA is already cooperating with Mitsubishi on the Outlander/4007/C-Aircross and ASX/4008/C4 Aircross crossovers and with Toyota on the Aygo/107/C1 city cars.

Both GM and PSA would neither confirm nor deny the report.

PSA’s statement reads as follows: “In the context of its globalization strategy and improving its operational performance, PSA Peugeot Citroen looks at potential cooperations and alliances. There can be no certainty at this stage that these discussions will result in any agreement.”

On GM’s behalf, spokesman Johan Willems was even more brief: “We routinely talk with others in the industry, but have no comment beyond that.”

Story References: Autonews