GM backs Peugeot tie-up with Dongfeng General Motors has given implicit support to PSA Peugeot Citroën to pursue its plans for Chinese state-owned carmaker Dongfeng to invest in the struggling French group. The US carmaker, which owns 7 per cent of Peugeot and operates a developing European alliance with the French carmaker, said it would waive its right to terminate the alliance in the event of a new investor. Peugeot also said on Thursday that it was taking an impairment charge of €1.1bn for its automobile division to reflect weaker than expected car markets, unfavourable exchange rate shifts and lower synergies from its GM alliance. French carmaker Peugeot has for months been in talks with Dongfeng for an agreement that is set to include a large capital injection into the French group in return for technology sharing. Under the terms of the agreement between General Motors and Peugeot, the US carmaker had the ability to end the partnership if the ownership of the French carmaker changed. But on Thursday the group said that GM had provided a waiver its "right to terminate the alliance under certain conditions in the event certain parties take a stake in PSA, in which case such parties would support the alliance." Peugeot on Thursday also confirmed that it was in talks with Dongfeng for a potential capital increase and an industrial partnership, as reported by the FT on Wednesday. "GM would vote any PSA shares it would then hold in favour of any such transaction," the two carmakers said in a statement. Dongfeng and Peugeot are in agreement on the main outlines of the deal including a €3bn-€4bn capital raising by Peugeot and an agreement for the two groups jointly to develop and produce low-cost small cars for southeast Asian markets, according to people with knowledge of the talks. PSA and GM, which agreed to work together in the face of the worst European car market for two decades, have struggled to maximise the synergies of their two operations. The two companies admitted on Thursday that the shared synergies from their alliance would only reach $1.2bn by 2018, sharply down from earlier forecasts of $2bn by 2018. They said they would abandon collaboration on a joint small car platform and small petrol engine, and instead focus on two larger models and shared purchasing. "These announcements show that the alliance [between Peugeot and GM] continues to progress and is a key component of the group's turnround plans in Europe," said Philippe Varin, chairman of the managing board of Peugeot.