According to sources, the two companies have entered the final stage of negotiations.

PSA Peugeot-Citroën announced that it was looking for an industrial partner last December. The French automaker is in dire financial straits: its auto manufacturing arm posted a loss of ,92 million ($121 million) in 2011.

The company is being forced to take drastic measures in order to save money. It delayed its ambitious Indian expansion plan, and it gave up its successful endurance racing program.

Earlier this year there were rumors that PSA was considering an alliance with Italy's Fiat. It seems that the deal failed to get off the ground, but PSA has a plan B.

According to France's La Tribune newspaper, the automaker is mulling an alliance with General Motors. An anonymous source told the newspaper that the two companies started the talks "several months ago", and that they have entered the final stage of negotiations.

The source said that the companies are hammering out the details for a full-fledged alliance, not for an occasional collaboration agreement like PSA already has with Toyota, Fiat, and BMW, among others.

At the time of writing neither PSA nor General Motors has commented on the matter. Talks like these have been known to fail at the last minute, so nothing is set in stone until an agreement is formally signed.

A potentially problematic obstacle is that the Peugeot family owns 30.9% of the company's capital, and it holds 48.3% of the voting rights. There is no way to get the deal approved without the family's consent, and sources indicate that it is not very open to the idea.

If both parties manage to conclude the talks quickly, an announcement about the alliance might be made at the Geneva Motor Show.