France’s iconic automotive manufacturer, Peugeot Citroen (UG), which has not achieved a profit since 2011, has agreed to bring in their Chinese partner Dongfeng Motor Corp and the French Government as investors in part of $7.26 billion plan to fund development of new vehicles. Peugeot will also shore up their financing through the selling of new stock and warrants, as well as setting up auto-loan joint ventures with Banco Santander SA, the Paris-based automaker announced. Peugeot has also renewed a €2.7 billion credit line with banks. Dongfeng Motor Corp and the French government will each pay €800 million to take a 14% stake apiece, totaling nearly half of a €3 billion capital increase. The sale marks a turning point for the 118-year-old carmaker, which is Europe’s second largest, with the founding Peugeot family relinquishing control for the first time in order to fund new models and expand their presence into countries with stronger demand for vehicles, such as China. It doesn’t seem that long ago that headlines were commenting on the strength that Dongfeng represented in the Chinese auto market, attracting a joint venture with the much larger and well established Peugeot Citroen, now that strength sees them bailing out their larger partner and gaining a 14% stake. With this increased funding available, we can expect to see Peugeot expand aggressively, especially in Asian markets, as well as in Russia and Latin America. The deal with Dongfeng and the French State is Peugeot’s second attempt in the last two years to bring in long-term strategic investors in order to fund vehicle development and drive expansion into emerging markets. In 2012, General Motors Co bought a stake in the French automaker that was unwound after only 21 months when expected savings from the cooperation missed their targets. Peugeot, which was among automotive manufacturers to be worst hit by the European auto market’s contraction to a two-decade low, will receive the investment In a two-step capital increase, with Dongfeng and France each to acquire €524 million of stock, followed by a further €276 million in the 3 billion-euro rights offer at €7.50 a share, according to the terms of the arrangement. The Woo Group analytical and research division will be monitoring Peugeot very closely over the coming months to see if they can live up to their plans to expand their range and sales presence in peripheral markets. If they can achieve the goals that have been set for the company then this will go a long way to providing a depth of earnings that will see them less vulnerable to regional contractions like the European one that has put them in this position.