Italian-American firm Fiat Chrysler Automobiles has confirmed that it is in talks with French rival PSA Peugeot over a tie-up to create one of the world’s biggest car makers.
The statement did not say whether the talks were aimed at a full merger or a looser alliance.
Fiat Chrysler has long been looking for a partner to help shoulder investments in the capital-heavy industry.
Talks this year with another French car maker, Renault, failed over French government concerns over the role of the Japanese partner Nissan.
Fiat Chrysler Automobiles was formed in 2014 out of a merger of Italian car maker Fiat and the American company Chrysler, which Fiat brought back from the brink of bankruptcy.