Floundering French automaker PSA Peugeot-Citroen may soon be getting a new accent, reports from China suggesting one of the booming Asian nation’s larger domestic manufacturers, Dongfeng Motor, is set to purchase a 30% stake in Peugeot for about $1.6 billion.
But the proposed deal could create some problems on a global scale. Among other things, it might short-circuit the relationship Peugeot has already established with General Motors. And it could prove problematic considering Dongfeng is already partnered with the French maker’s rival, the Renault-Nissan alliance.
PSA Peugeot-Citroen has been one of the automotive manufacturers hardest hit by the ongoing European recession. It lost more than $6.5 billion last year and remains deep in the red for at least the first half of 2013. The maker has already said it will close one key plant in an effort to cope with worsening capacity utilization issues – despite strong resistance from the French government.