The deal is still a potential purchase but would make Peugeot and Citroën Europe’s second-largest OEM, and refocus General Motor’s efforts on the American continent.

GM is reportedly keen to go through with the deal this time, having backed out in 2009 of selling the Opel division to a Canadian supplier, Magna. This fell through as GM began to feel more positive about its prospects in Europe. The British-born Vauxhall and German Opel produced GM vehicles for sale in Europe but have reportedly cost GM a total of US$8 billion since 2009.

The French car makers, together known as PSA, proposed a pay-rise for workers averaging 1.6 percent for 2017, compared to 2016’s 1.25 percent, implying the company’s finances are sturdy enough to consider buying European GM divisions, Vauxhall and Opel. The French government supports the Peugeot-Citroën plan to acquire Opel.

The profitability of Vauxhall and Opel has improved however, and 11 percent of GM’s revenue was tied to technology linked to these European operations last year. Efraim Levy, Equity Analyst for CFRA Research was surprised by GM looking to sell the divisions considering the reduced losses profits derived from Vauxhall and Opel. Levy expects GM to refocus on more profitable regions such as the US and China.

GM issued a statement describing its alliance with PSA as generating “substantial synergies” for the two companies. “Within this framework, General Motors and PSA Group regularly examine additional expansion and cooperation possibilities,” said Pat Morrissey, for GM News Relations.

While the French brands are hard-come-by in Mexico, PSA tagged the country as the only Latin American country showing market growth for the Group. In response to predicted success in Mexico Peugeot-Citroën planned to open 13 new dealerships in Mexico in 2016 but has yet to penetrate the market to the same extent as GM has managed with Chevrolet.

This move could mark a sign of both the French and US-owned carmakers choosing to focus on their local markets, PSA on Europe and GM on the Americas, reflecting protectionist policies prevalent on both continents in recent months.

Data sources: Auto News, Portal Automotriz, El País, The Guardian.

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