GM sells stake in PSA Peugeot Citroen

General Motors has sold its seven per cent stake in PSA Peugeot Citroën for $250 million (around £153 million).

The two companies will continue to work together, though, and will push ahead with plans to merge production of their respective compact MPV and SUV models onto a PSA platform.

Existing joint-venture projects will continue as well. The planned new B-segment MPV will be built at GM's Zaragoza plant in Spain, while a new C-segment crossover model will be built by PSA's Sochaux plant in France. The first vehicles from that project are expected to be seen in 2016.

Vice chairman Steve Girsky said: "Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed.

"The alliance remains strong with our focus on joint vehicle programmes, cross manufacturing, purchasing, and logistics. We’re making good progress while remaining open to new opportunities.”

Initially it was believed the Peugeot family would step back from its position within the company to allow GM complete control of PSA. Peugeot revealed a £4.3 billion loss in the 2012 financial year, alongside automotive revenues which fell by over 10 per cent. 

PSA stock fell by as much as 8.3 per cent yesterday following the announcement of GM's sale. Analyst Sascha Gommel told Bloomberg: "The sale is a surprise and reflects negatively on the GM-Peugeot partnership.

“On the other hand, it signals that the negotiations with Dongfeng are well advanced and that a deal is more likely."

PSA has been in a number of talks with the Chinese manufacturer Dongfeng in recent months, with the latest reports suggesting a stake sale is imminent. Both Dongfeng and the French government are likely to invest around £1 billion each in PSA, in exchange for owning between 20 and 30 per cent of the company. If that happens, the Peugeot family would lose control of the firm, as they would have to surrender voting rights and dilute their 25.4 per cent stake.

GM also announced this week that it would axe Chevrolet's operations in Europe and would be closing all manufacturing operations in Australia and New Zealand by 2017.

GM was unable to comment on the situation in the UK at the time of writing.