Two years after it bought Vauxhall and Opel from General Motors, PSA Group has confirmed it is exploring a merger with Fiat Chrysler Automobiles.
The French company, which owns the Peugeot, Citroen, Vauxhall and DS brands, could create one of the world's largest carmakers if a merger was agreed to add Fiat, Alfa Romeo, Chrysler and Jeep brands under shared strategic leadership.
Reports suggest said the discussions are at an early stage.
Fiat Chrysler had explored a merger with Renault ealier this year but those talks ended.
Requirements for costly investment in new vehicle technology to meet emissions standards and safety demands, plus changes to how consumers are shopping for their cars, are driving some car manufacturers to seek partnerships and acquisitions that create greater scale operations and that will bring manufacturing synergies.
PSA Group has previously stated it plans to take the Peugeot brand to the US market, where FCA's Jeep and Chrysler brands are already strong.
Fiat Chrysler already has a commercial vehicle partnership with Peugeot.