Volkswagen is reportedly in talks to buy the lease of the Detroit-based carmaker’s fleet, according to a Bloomberg report.
The deal could be worth more than $1 billion.
The news comes as GM struggles to gain market share after several major carmakers cut their leases and some dealers stopped selling new vehicles.
A spokesperson for Volkswagen declined to comment on the report.
Volkswagen has been struggling to gain more than 5% market share since 2012, and its fleet of 1.1 million vehicles is estimated to be worth about $1 trillion.
GM’s lease deal is reportedly worth around $500 million per year, but that number is subject to change, as GM and VW work to agree on a price.
Volkswagen will lease the fleet from the automaker for 20 years.
Volkswagen also leases lease agreements from General Motors, Ford, and Toyota, according the Bloomberg report, which was first reported by the Detroit Free Press.
In addition to the lease deal, VW is expected to pay for the leasing of more than 6 million vehicles, according a Reuters report.
The lease deal could benefit both parties.
Volkswagen is currently the largest carmaker in the U.S. with around 9 million vehicles.
Its lease agreement with GM has a lease value of $1,300,000 per vehicle, while VW’s lease deals with Ford, GM, and Ford have a lease price of $2,400,000.
Both carmakers are currently working on a deal to buy a large portion of GM’s fleet in the 2020s, and VW is also looking to buy more than 3 million vehicles from Ford and Ford’s global subsidiary, Ford Global Operations.
“This deal is a significant boost for the global industry,” VW CEO Matthias Mueller said in a statement to Reuters.
“The leasing business has never been more important, and Volkswagen’s long-term commitment to lease-to-own will be of great benefit to both companies.”
GM has already been looking to acquire a significant portion of the fleet, and the automicanas fleet is estimated at around 11 million vehicles and could hit as high as 19 million by 2023.
While the deal is good news for Volkswagen, it also is good for General Motors and Ford, which are also facing significant market pressures due to their lease deals.