France and Italy are reportedly considering a potential tie-up between automakers PSA/Peugeot-Citroën and Fiat.
The report comes just days after Fiat CEO Sergio Marchionne said the Italian company needed to find a partner to survive the present auto sector crisis.
Analysts have said a PSA-Fiat tie-up would make commercial sense since both have strong positions in small cars.
The companies combined made 6.2 million units last year, about the same as Volkswagen and Renault-Nissan. The combined output would make Fiat-PSA the world’s fourth-biggest automaker by production along with VW and Renault-Nissan after Toyota, General Motors and Ford.
PSA have said they is not looking to add to its alliances but is willing to discuss deepening its existing relationships. Fiat’s Marchionne said in an interview with Automotive News Europe that he expected the auto industry to consolidate in the next two years, leaving six players to compete globally.