A deal between General Motors, its former parts unit Delphi Corporation and the United Auto Workers union is “very close” according to a US report.

One-time Delphi parent General Motors is near to a deal with the United Auto Workers that would provide a cash payout to the component maker’s workers in exchange for lower hourly wages, people familiar with the talks told The Detroit News.

The paper said GM would fund the programme while the proposal would help break a long-standing hiatus on wages and benefits and help Michigan-based Delphi emerge from bankruptcy.

Talks between GM, the UAW, Delphi and its equity partners were held Wednesday, and the parties hope to complete an agreement within a week or so, the report added.

The Detroit News said the proposal would offer 4,000 UAW workers a one-time lump sum cash payment in return for accepting lower wages that could range from $US14-$18 an hour – similar to what newer temporary workers earn. Workers could also take the lump sum and accept early retirement or flow back to GM. The amount of the lump sum payment was not clear, the paper added.

GM spokeswoman Renee Rashid-Merem acknowledged to the Detroit News that GM would have to assume some Delphi labour costs, but declined to confirm whether an offer of a lump sum in exchange for lower wage rates was on the table. She reportedly said the talks were continuing and progress was being made, and that comment was echoed by a Delphi spokesman contacted by the paper.

The newspaper noted that the UAW has turned down at least two offers from Delphi that would have meant deep pay cuts.