PSA, Dongfeng Near Equity Deal?

PSA Peugeot Citroen and Dongfeng Motor Group reportedly have agreed on the main terms of an expanded partnership that would include an equity investment in PSA of €3 billion-€4 billion.

Unnamed sources tell the Financial Times that the plan calls for the companies to jointly produce low-cost small cars for markets in southeast Asia. Earlier reports indicated that a successful deal would hinge upon finding a mutually beneficial product plan.

FT's sources say the companies hope to finalize the agreement in the first quarter of 2014. The size of Dongfeng's resulting stake in PSA isn't yet clear. The French government appears likely to match the Chinese company's investment.

PSA and Dongfeng have operated a joint venture to build PSA-designed vehicles in China for 20 years. Dongfeng operates similar alliances in the country with Honda, Kia and Nissan.