The owner of French carmaker Peugeot is in talks with rival Fiat Chrysler Automobiles about a deal to merge with the Italian-American group and create a company with shares worth more than $47bn, according to people informed of the talks.

The discussions mark an attempt by France's PSA and its chief executive Carlos Tavares to take advantage of a failed combination earlier this year between FCA and rival French carmaker Renault.

For FCA, a deal would mark the latest attempt to follow through on its belief the car industry is in desperate need of consolidation.

Under one iteration of a deal, PSA would combine with FCA in an all-stock merger that would see Mr Tavares run the business, while John Elkann - the scion of Italy's Agnelli family, which controls FCA - would become its chairman, one person said.

According to another person briefed on the matter, talks have been on and off throughout this year. They broke off during the attempted merger with Renault before beginning again more recently.

Early on Wednesday both FCA and PSA released statements confirming they were in merger talks without, giving further details.

Mr Tavares and Mr Elkann have personally been discussing the tie-up, and their discussions remain at an early stage, said the same person.

All of the people involved said there was no guarantee a deal would be reached.

New York-traded shares in FCA jumped more than 7 per cent following a report on the talks in the Wall Street Journal late on Tuesday. A spokesperson for PSA said the group "would not comment on market rumours". FCA declined to comment.

This year shares in PSA have risen 38 per cent compared with barely 1 per cent for FCA. The French company has a market value of €23.6bn, equivalent to $26.2bn, while FCA's sits at about $22bn.

The revived talks come months after FCA withdrew its proposal for a €33bn merger with Renault, just days after the original proposal was made.

The deal fell apart in June after the French government, Renault's largest shareholder with just over 15 per cent, held back its support - ostensibly since Renault's alliance partner Nissan was not fully on board.

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Analysts were positive that a deal to combine Peugeot and Fiat Chrysler was back on the table.

"Timing aside, there is clearly the potential for significant gross synergies [in the] €7bn range over 2021-2023," wrote Arndt Ellinghorst at Evercore. He added that Mr Tavares has proven himself a highly effective turnround boss, citing Opel which PSA bought in 2017.

"FCA needs scale in Europe and PSA has no presence in the US, where FCA has market share for sale," said Philippe Houchois, an autos analyst at Jefferies. "PSA also has the technology to help with FCA's carbon emission issues."

The French state's 12 per cent stake in PSA was also "likely to prove less of a barrier than it did to a merger with Renault", said Mr Houchois, in part since there would be no third party involved.

Other analysts have suggested the French state would be reluctant to be seen as a block to another deal.

Sergio Marchionne, FCA's longstanding chief executive, before his death last summer, argued for years for consolidation in the auto sector in the face of disruption from new technology and consumer saturation in his company's home car markets.

He publicly pursued a tie-up with General Motors in 2015 but was rejected by Mary Barra, the US company's chief executive.

The Agnelli and Peugeot families held talks a decade ago, before Fiat decided to pursue Chrysler.

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