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Sources have told Reuters that PSA Peugeot Citroen‘s founding family could hand control of the troubled carmaker over to General Motors in return for a fresh capital injection.

After the seeking of finance from several potential investors (including Chinese partner Dongfeng) proved inconclusive, PSA Peugeot Citroen is trying to convince 7% shareholder GM to merge Peugeot with Opel, which is also over-capacitated.

However, in doing so, GM would need to cut both Peugeot and Opel’s production capacities, which could mean factory closures and job losses in France and Germany. The French government is unlikely to allow this to happen in Peugeot’s home market.

“The Peugeot family has now accepted that they’ll lose control, so this is no longer an issue,” an unnamed source told the news agency. The Peugeot family owns an overall 25.4% stake in the company that commands 38.1% of voting rights.

Domestic market-dependent Peugeot burned €3 billion (RM12.4 billion) in operating cash last year, with its shares falling 77% over the past two years. Jobs have been cut, a production plan at Aulnay has been shelved and there has been a bailout by the French government. The carmaker must lay the groundwork for a capital injection this year, sources have said.

Reuters also reports that PSA Peugeot Citroen CEO Philippe Varin is expected to present a new industrial plan within months, with some officials also suggesting that the government or a state-owned investment vehicle could take a stake in Peugeot if necessary.