Talks between alliance partners General Motors and PSA Peugeot Citroen on combining brands have stalled, as the French company accepts a government bailout amid deepening financial difficulties.

Further to the official formation of the alliance on February 29, and a shared vehicle platform plan announced in October, the two manufacturing groups had been exploring the possibility of combining Peugeot with GM’s European brand Opel.

Opel Astra OPC

But Reuters reports two sources say discussions have been paused following Peugeot’s announcement of a worsening financial position and to accept a state bailout from the French government.

According to one source, both car makers agreed to a “pause” in Peugeot-Opel talks, adding, the government bailout is “sabotaging the plan”.

Another source told the publication that a coming together of the two brands would mean more plant and staff cuts for both Peugeot and Opel and that “the government bailout conditions rule out French job cuts, which means a deal can’t happen any faster.”

Peugeot 208

Both Peugeot and GM deny any talks have been under discussion.

The report says Peugeot is losing 160 million euros ($196 million) per month, while GM is predicting European losses of US$1.5-1.8 billion ($1.45-1.73 billion) this year.

The turbulent times in Europe have already seen an impact on Opel, Peugeot and in recent days, Porsche.

  • Tex

    Such a shame too – these two car companies make some pretty impressive cars

  • Luke Brinsmead

    What’s happening to Renault? Maybe they should join the alliance. 

    • Modern Man

      Why does renault need to join?

      They already are in an alliancw with nissan and are not under anywhere near the same pressures due to a better nusiness plane and a broader spread across the globe.

      look at their home website and you will see what i mean.

      between Nissan, Renault, Dacia, Lada, Samsung Motors most of the world is covered so if euro drops the others prop it up.

      Citroen and Peugeot (PSA) are just trying to stay alive at the moment. bad decisions bad product and too little too late has seen it go down. if they close (i doubt the french will allow it) it would be a massive shame, but they better hurry up at sort their sh*$t out.

      • Tex

        Agreed – Renault-Nissan alliance is at the moment the 4th biggest in the world, behind Toyota, GM and VW.

        • Luke Brinsmead

          Really, interesting…it pays to not have all the eggs in one basket, especially considering how many industrialised countries there are now. Peugeot and Citroen are living in the dark ages, they may have to consider some production in Thailand like what Ford has done. Or even better, Vietnam, as there was some French occupation in the past.

  • David Salter

    Are these brands as doomed as Pontiac etc were during the GFC?

    • Golfschwein

      I wouldn’t think so, David. Have a look at Buick’s line-up. It’s very heavily dependent on Opel. So, if GM casts Opel aside, Buick’s range diminishes by the corresponding amount. Okay, they could put a nice toothy grille on a Cruze, but I suspect their clients don’t want that.

      As for Peugeot and Citroen, who knows?

  • Chevrons

    I think the report listing Peugeot losing 160 million euros per month is misleading. The facts are that PSA made a net profit in 2011 of over 780 million euros and PSA’s group earnings for the first 9 months of 2012 are down by less than 5% on the year before.

    • matt

      so why need goverment aid? wheres the near billion dollars profit from last year gone then? product development?

  • save it for the track

    Peugeot, Citroen and Renault all get French Government assistance by way of the leasing deals that foreigners can do on one of the Marques.(tax break from Government) If you’re going to be in Europe for a length of time over say 40 days or so, leasing one of these works out cheaper than renting something else. Interesting to see that the French Government aid is contingent on no French job cuts. Unlike here in Australia where successive Governments throw money at Holden/Ford and even Toyota, with not many conditions at all it would seem…