PSA Peugeot Citroen is in talks over a possible alliance with Detroit-based General Motors, a deal that could dwarf France's leading carmaker's existing partnerships with BMW, Mitsubishi Motors and Toyota.

The talks were confirmed yesterday by France's labor minister.

The Paris-based maker lost 439 million euros (US$578 million) on its car business last year amid falling sales and concerns over management's strategy among industry analysts. The family-controlled company whose roots stretch back more than 200 years has been hard hit by the economic downturn in Europe, where it sells more than 50 percent of the 3.5 million car it sells annually.

Peugeot's statement said only that it was examining "projects for cooperation and alliances."

French Labor Minister Xavier Bertrand said Peugeot CEO Philippe Varin informed him on Tuesday of the talks about a "strategic partnership" with GM. Bertrand said the proposed deal would give Peugeot the size to compete globally.