According to sources with knowledge of the matter, China’s Dongfeng could ultimately become the French automakers last hope, as General Motors decided to wind down cooperation with Peugeot soon after they allied and soon also turned down a government-backed tie-up.
After the duo revealed what was seen as a large alliance in February of 2012, GM even acquiring a 7% stake in PSA Peugeot Citroen, the two automakers soon hit obstacles, just after eight months, when GM announced that its Chinese partner SAIC would veto important plans including the joint development of larger cars, according to the people, who declined to be named because they were not allowed to comment confidential proceedings. In June, Peugeot even won French government approval for a come back tie-up with GM’s Opel division, but the U.S. carmaker said no, citing CEO Dan Akerson’s likely succession by early 2015 and political issues, people said. GM is still 7.3% U.S. government-owned.
The string of problems with GM has forced Peugeot Chief Executive’s hand, so he decided to look elsewhere for the critical cash injection, as there is mounting concern over the company’s finances. So enters the stage the reported preparing of a 3 billion euro ($4 billion) capital increase, in which Dongfeng and the French state would buy matching stakes of between 20 and 30%.