PARIS—General Motors Co. has entered talks to sell its European business Opel to Peugeot as the U.S. auto giant seeks to shed money-losing operations abroad and focus on its home market.

A deal to sell GM’s Opel and Vauxhall brands would create Europe’s second-largest car maker, but discussions are complex and could still fall apart, people familiar with the matter said. Negotiations over price continue and GM is looking for a multibillion-dollar amount for the Opel brand, a person familiar with the matter said.

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