Only months after General Motors invested $423 million for a 7% stake in French automaker PSA Peugeot Citroen, G.M. filed documents with the U.S. Securities and Exchange Commission on Friday that it may have to write down the investment because it exceeded its fair value at the end of June.  PSA is plagued with financial problems, appearing to be headed for its fifth year of losses and hampered in restructuring the company with involvment from the French government. 

G.M. said it plans to retain the investment until it recovers, not much consolation for the French automaker that was looking for an American partner to help it recover from the downsized and increasingly competitive European market.  The situation doesn't help G.M. either, as it looks to restructure its European business. It's hard to restructure two losing automotive companies in a market that isn't growing with both companies under heavy labor union and government pressure to retain jobs and keep non-competitive assembly plants operating.

G.M. had plans to work with PSA as a partner in Europe to combine capacity with its Adam Opel unit and also to share new product development costs, especially in low-emission and perhaps hybrid vehicles.  Now G.M. will have to determine if its worth investing in new product development with a company that has mounting losses and has its restructuring plan under formal investigation by the French government.

Jim Cain, a spokesperson for G.M., said on Friday that "We continue to make good progress on all of our work streams with PSA, which will create long-term value for both partners."

Most analysts are questioning if that is the case and suggest that G.M. laments the investment that has only made its European dilemma worse. 

While neither automaker has presented a plan publicly, G.M. has stated that it wants to shutter an Opel assembly plant at Bochum, Germany, and PSA's restructuring plan included the elimination of 8,000 jobs and the closure of a plant at Aulnay.  The two would have then likely developed joint manufacturing in Europe of vehicles with shared technology.