GM CEO 'exploring opportunities' for Opel with Peugeot

By David Shepardson

WASHINGTON (Reuters) - General Motors Chief Executive Mary Barra said on Tuesday the Detroit automaker is exploring opportunities with French automaker PSA Group , but declined to discuss a potential sale of its money-losing European Opel unit.

At the Economic Club of Washington, Barra did not address in detail the talks with Peugeot that became public two weeks ago and refused to say when the largest U.S. automaker might decide whether to sell Opel, which has lost money for 16 straight years, to Peugeot.

"We've done a lot to improve the business but we're exploring opportunities to see if we can accelerate that even more because scale does matter in this business," she said. "We're continuing the dialogue."

Barra also said that the automaker backs corporate tax reform, but raised concerns about a Republican "border adjustment" tax proposal.

"If not done very thoughtfully it could be problematic," she said, saying tax reform needs to avoid "unintended consequences."

The planned border adjustment tax would impose a 20 percent tax on imported goods while providing write-offs for goods that are exported. Some automakers have raised concerns about the tax, especially because all U.S.-built vehicles include a significant number of foreign-produced parts.

NO TIMETABLE

Some reports in Europe have suggested GM could have a deal with PSA as early as next week, but Barra declined to discuss a timetable.

PSA, the Paris-based maker of Peugeot and Citroen cars, and Detroit-based GM confirmed on Feb. 14 they were in talks over a PSA-Opel tie-up to create Europe's second-largest carmaker by sales after Volkswagen AG .

Acquiring GM's Opel and Vauxhall brands would give PSA a 16.3 percent share of the European passenger car market, vaulting it ahead of French rival Renault SA .

PSA and GM have tried before to combine their small cars in the failed centrepiece of a "global strategic alliance" unveiled in 2012, and rapidly scaled back to three shared projects from 40 initially considered.

Last week, German magazine Der Spiegel reported GM told Peugeot it would only sell licenses for the manufacture of Opel cars to the French company if it agreed not to sell the vehicles in North America, Russia or China.

(Reporting by David Shepardson; Editing by Meredith Mazzilli)