PSA Peugeot Citroen has agreed to form an alliance with General Motors.
GM will take a seven percent stake in the French carmaker which will issue new shares for that.
The two companies will pool research and development as well as vehicle platforms and technology.
They reckon to save 1.5 billion euros within five years.
GM last year regained the number one global sales spot, selling just over nine million vehicles, including its struggling European division Opel-Vauxhall.
PSA Peugeot Citroen’s sales last year slipped to 3.5 million.
The tie up has not impressed analysts and investors.
The feeling is that it will not address the problems faced by Peugeot and Opel-Vauxhall which are slow sales and overcapacity in Europe.
GM said the strategic alliance will reinforce but not replace both firm’s efforts to find a sustainable profitability f their European operations.
GM’s European operations lost 560 million last year, while Peugeot was nearly 500 million euros in the red in the second half.