GM, the world's largest carmaker, is looking for ways to turn around its unprofitable Opel brand, while Peugeot is seeking to stem a growing debt load. Peugeot's 2011 sales in Europe plunged 8.8 percent to 1.68 million vehicles. GM's dropped 1.9 percent to 1.17 million. Auto executives expect deliveries in the region to shrink in 2012 for a fifth year.
No final agreement has been reached on the alliance and the size of the stake could change, the people said.
Peugeot CEO Philippe Varin said this month that the company was willing to investigate partnerships as long as they were in line with the group's strategy, including expansion outside Europe, and contributed synergies while maintaining Peugeot's independence.
Peugeot, Europe's second-biggest automaker after Volkswagen AG, announced plans Feb. 15 to sell 1.5 billion euros in assets to reduce debt, which widened to 3.4 billion euros as profit and sales fell.
GM, which this month posted annual net income of $7.6 billion after dividends for 2011, is planning more cost cuts for its unprofitable European unit after the last turnaround plan failed to end losses there.
The automaker's Europe business, including the Opel brand, lost $747 million last year before taxes and interest. While that's an improvement from $1.95 billion lost in 2010, GM had planned to break even in the region until November, when it pulled back the forecast as the European outlook worsened.
Peugeot, whose origins date back to the early 19th century laminated steel- and toolmaker Peugeot-Frères et Jacques Maillard-Salins, is still 30 percent owned by the Peugeot family, according to data compiled by Bloomberg.
The company's current chairman Thierry Peugeot is the great-grandson of Eugene, who jointly led the company with his cousin Armand when it produced its first automobile in 1891. Thierry is joined on the board by relatives Roland, Robert and Jean-Philippe Peugeot, and Marie-Helene Roncoroni.
Blackrock Inc. last year became the second-largest investor with 5 percent, according to a regulatory filing.
Peugeot, whose carmaking division missed a target of breaking even in 2011, said Feb. 15 it will sell property as well as a holding in the Gefco trucking unit that has yet to be determined. The disposals include the Citer vehicle-rental unit that Peugeot sold to Enterprise Holdings Inc. on Feb. 1 for 440 million euros.
Earnings before interest, taxes and one-time gains or costs fell to 1.32 billion euros in 2011 from 1.8 billion euros a year earlier, Peugeot said this month. The company's deliveries globally fell 1.5 percent to 3.5 million vehicles in 2011, led by the drop in Europe.