General Motors is considering the sale of its Europe-based Opel and Vauxhaul brands to French automotive manufacturer PSA Group, the parent company of Peugeot and Citroen.

The two companies “are exploring numerous strategic initiatives aiming at improving profitability and operational efficiency, including a potential acquisition of Opel Vauxhall by PSA”, a statement said on GM website.

“There can be no assurance that an agreement will be reached,” GM cautioned.

Combining PSA Group with Opel and its British brand Vauxhall would create the second-largest carmaker by market share in Europe, with 16.6 per cent of sales according to 2016 figures, Fox News reported.

The merger would be second only to Volkswagen, with 23.9 per cent, and would surpass the Renault-Nissan alliance, which had 13.9 per cent, according to the report.