The Peugeot family, founders of PSA Peugeot Citroen, could step back to let GM take over the ailing business. City sources have already warned that PSA could get close to not having enough free cash to run the business by the end of 2013.
A report from news agency Reuters suggests that if GM were to take control of PSA it would want to shut down factories and make redundancies in France and Germany, something the French government is unlikely to let Peugeot family do in its home market.
Peugeot is reported to have sought finance for the business elsewhere, but a lack of willing bidders has forced it to turn to GM, which owns seven per cent of the current business. The move was made with the support of current PSA Chief Executive Phiippe Varin, reports Reuters.
A similar bid to sell a substantial stake to a consortium led by Dongfeng Motor Group has already fallen through.
Overall the Peugeot family owns a 25.4 per cent stake in the company, but controls 38.1 per cent of the voting rights.