DFMLogo.gifDongfeng, China’s second biggest carmaker, may be mulling a stake in troubled French car firm PSA Peugeot Citroen, according to a Chinese state-backed newspaper.

Stranger things have happened of course and there’s no denying that Chinese has eyes on the western car industry, particularly those OEMs with prestigious brands that have fallen on hard times.

Last year, the Chinese-owned National Electric Vehicles Sweden (NEVS) bought Sweden’s bankrupt Saab. It plans to use Saab’s assets to build a new line of electric vehicles as well a relaunch the previous-generation Saab 9-3 model with a conventional engine. Eventually the vehicles will be sold globally, although Chinese buyers will be first to get the Made-in-China Saabs.

Dongfeng already has a joint venture with the French group, so an equity investment would make sense, and of course, PSA has a variety of platforms that Dongfeng could revamp or adapt to Chinese market, much like NEVS hopes to do.

A China-based spokeswoman for PSA also declined to comment, describing the reports as “rumours”.

PSA, like other European carmakers, is struggling to cope with a European car market that has slumped due to the sovereign debt crisis.

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