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Plans for European car giant

Peugeot in talks over merger with Vauxhall

Peugeot could be about to shake-up the car industry after indicating that it could buy Vauxhall and Opel from General Motors.

A merger of France-based PSA Group, owner of Peugeot and Citreon, and GM’s European car business would bring together a number of top-selling brands to create Europe’s second-largest carmaker behind Volkswagen.

It would also represent a huge opportunity to cut cost in an industry beset with over-capacity.

GM employs 35,000 in the UK under the Vauxhall brand, including 4,500 staff at car factory Ellesmere Port and the Luton van builder. The Cheshire operation, where it makes the Astra Hatch and the Astra Sports Tourer, is already working at about half its capacity.

The Vauxhall brand is now only sold in the UK. It stopped being sold abroad about 35 years ago, even in Ireland.

PSA is understood to have been working with GM on pan-European projects since 2012 and stressed that there is no guarantee of a full-blow acquisition. PSA has owned Citroen since 1974.

GM last week said its European business has narrowed its losses to £206m and is on course to break even.  Losses on the continent since 2000 have now risen to more than £12 billion.

A deal between the two groups would create a business with about 16% of the European car market.

PSA nearly collapsed three years ago until being saved in a £2.5billion state-backed bailout whgich left French government holding 14% of the business.

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