Suggestions of a merger between GM’s Opel brand and PSA Peugeot-Citroen are gathering pace in Europe as both companies struggle in a falling European car market.

According to a Reuters report, the two companies have held extensive in-depth talks about the second phase of their alliance, which will accelerate the integration and scope of collaboration. One source told Reuters that a range of options have already been discussed, including: "selling Opel to Peugeot, buying Peugeot's automotive business or putting them all together in a new entity."

While neither would comment on the reports it is understood that Opel union bosses have said that they want to see a solution before the end of October. Opel already own 7% of the French car maker.