By William Boston in Berlin and Jenny Gross in London
European politicians and union leaders moved to protect jobs on Friday, following this week's surprise announcement that General Motors Co. was in advanced talks to sell its German Opel and British Vauxhall units to French car maker Peugeot.
The deal, if completed, would create Europe's second-largest auto maker by sales, helping Peugeot gain scale. The French car maker has recently undergone a sweeping restructuring and turnaround.
Governments and trade unions in France, Germany and the U.K. fear it would slash jobs at unprofitable Opel and Vauxhall to cut costs after an acquisition. German Chancellor Angela Merkel's government this week formed a panel to review any deal.
"We will do everything that we can politically to keep jobs and factories in Germany safe," Ms. Merkel said Friday.
German Economics Minister Brigitte Zypries plans to meet her French counterpart in Paris on Thursday.
Germany's powerful IG Metall trade union, which sits on the boards of the country's biggest manufacturing companies, pledged to engage in "constructive talks" with Peugeot if it acquired Opel and Vauxhall.
The deal could increase job security by transforming Peugeot Citroën, Opel and Vauxhall into a single group that is second to Volkswagen AG in Europe, the union said Friday.
"In principle, a combination with PSA is sensible," the head of Opel, Karl-Thomas Neumann, said on Twitter. "We're doing everything to make Opel sustainably successful."
GM in 2009 agreed to sell Opel to Canada's Magna International Inc., but then rescinded the offer. It closed factories and tried to nurse Opel back to profitability. IG Metall agreed to a plant closure in exchange for guarantees on jobs, wages and investments at Opel's remaining factories.
"We expect that all wage agreements will stay valid in [the] case of an acquisition," IG Metall regional director, Jörg Köhlinger, said. "All employees need this security."
Peugeot hasn't disclosed plans for Opel and Vauxhall, but analysts expect the French car maker would cut costs by scrapping redundant operations. "A combination would make strategic sense as it could release substantial synergies and improve Peugeot's market position in Europe," Moody's Investors Service said.
In the U.K., fears are running high that Vauxhall's factories could be sacrificed by Peugeot to protect German and French Opel jobs. In the wake of the June Brexit vote, many manufacturers are considering whether to remain in the country anyway.
U.K. Business Secretary Greg Clark, who is seeking safeguards for Vauxhall jobs, said Peugeot executives told him they valued the strength of the Vauxhall brand on Thursday.
"While discussions are still ongoing, they made clear to me that in any deal, these were strengths they would wish to build on," Mr. Clark said.
A Peugeot spokesman declined to comment on any meetings with Mr. Clark.
The talks on Vauxhall's future come at a sensitive time for the British government, which may formally announce its exit from the European Union in March. British Prime Minister Theresa May said in January that the U.K. planned to leave the EU's single market and it is unclear what that would mean for the U.K. auto industry, which relies on trade with Europe and provides thousands of manufacturing jobs.
In the wake of the referendum, global auto makers suggested they would have to reassess U.K. investments, amid concerns about potential tariffs, currency fluctuations and declining sales.
If no trade deal is struck between Britain and the EU, manufacturers could be hit by the 10% tariff the bloc levies on imported cars. Higher costs for car manufacturers could lead to job losses.
in Berlin and
in Paris contributed to this article.
Write to William Boston at firstname.lastname@example.org and Jenny Gross at email@example.com