PSA Group is holding talks with General Motors about buying its European Opel division, the French carmaker said on Tuesday, February 14, a deal which would increase competition for market leader Volkswagen, Reuters reports.

The maker of Peugeot, Citroen and DS cars is "exploring a number of strategic initiatives with GM with the aim of increasing its profitability and operating efficiency, including a potential acquisition of Opel," a spokesman said.

The confirmation came after sources told Reuters earlier on Tuesday that the two companies were in advanced discussions to combine PSA with the U.S. carmaker's Opel business.

A deal may be announced within days, the sources said.

GM and PSA already share production of SUVs and commercial vans, a relic of their last attempt to forge a broader alliance, which was unwound in 2013 with the sale of the U.S. carmaker's stake in PSA.