PSA Peugeot Citroen sours co-op deal with GM after taking government assistance.

GM and PSA Peugeot Citroen have stopped earlier talks to co-develop vehicles together for sale in Europe, according to sources who remain unnamed. The two companies already have an operational partnership in place, but wanted to take it to a deeper level.

The reason for the breakdown, Reuters reported, is due to concerns over the financial troubles and government bailouts at the French automaker. One source said the talks are in "pause," and that the government bailout is "sabotaging the plan."

A different informant believes the deal isn't likely to resume until 2014, when the market is expected to bounce to healthier levels. At the same time, the government assistance means no French jobs could be cut, which makes any tie-up politically impossible, as all reductions would have to be made on the German side, at Opel.

2018 GMC Acadia
2015 GMC Sierra Heavy Duty
2016 GMC Terrain Denali
2016 GMC Canyon
2017 GMC Terrain
2016 GMC Savana Passenger
2016 GMC Savana Cargo
2016 GMC Yukon XL
2016 GMC Yukon
2015 GMC Sierra 1500

Low demand has led Peugeot to cut 10,000 jobs and close a local plant, while GM is dealing with the union to close an Opel factory in Germany.

One of the options under consideration was to have GM transfer Opel to the combined company and grant them $5 billion to offset future losses and restructure, said one of the sources. This would let GM remove Opel, an underperforming unit, from its own accounting books.