Troubled French automaker PSA Peugeot Citroën is reportedly in talks to sell as much as a 30 percent stake in its company to China’s second-largest automobile manufacturer, Dongfeng Motor Corporation. Dongfeng and Peugeot have been involved in a joint venture partnership since 1992, and analysts say it makes sense for Peugeot to reach out to its Chinese partner for a cash infusion to stem its mounting financial troubles.
Peugeot, Europe’s second-largest carmaker, reported operating losses of $681 million in its automotive unit for the first half of 2013. It is steadily losing market share to Volkswagen AG in Europe, where it has shuttered factories and cut 11,200 jobs as part of a $10 billion restructuring plan.
According to Reuters, Peugeot is currently seeking a combined $4.1 billion from both Dongfeng and the French government, which would each contribute an equal amount of capital in the company and take matching stakes of 20 to 30 percent. An expansion of Peugeot’s joint venture with Dongfeng would accompany the capital infusion.
Under their joint venture, Peugeot and Dongfeng produce vehicles including the Citroen C5 and the Peugeot 3008 at three manufacturing plants in Wuhan. The most recently-opened plant came online in July, with the goal of increasing the company’s annual production capacity by two-thirds to 750,000 vehicles by the end of 2015.