Why China Is Investing in GM's French Partner


GM had planned to have Peugeot make the Opel Zafira in one of Peugeot's French factories, a move to cut costs -- but now those plans may be in question. Photo credit: General Motors

Investors were puzzled when General Motors  (NYSE: GM  ) took a 7% stake in troubled French automaker PSA Peugeot Citroen  (NASDAQOTH: PUGOY  ) early in 2012. On the one hand, sharing parts and future product costs with Peugeot looked like a good opportunity to help GM reduce costs at its own money-losing European division. 

On the other hand, Peugeot was -- and is -- a company in dire straits. The same problems that have made Europe a costly headache for GM have put Peugeot in something close to mortal danger. It quickly became clear that the Peugeot family was hoping that General Motors would be willing to ride to its rescue with a full-blown merger.

But GM's leadership seems to have balked at that "opportunity."  That's where China comes in. In this video, Fool.com contributor John Rosevear looks at why a Chinese automaker is on the verge of a big investment in Peugeot -- and at what those plans mean for General Motors, in Europe and elsewhere.

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