PSA and Dongfeng are in talks to build on their existing Chinese joint venture with cooperation in other markets. The deal would involve a multibillion-euro share issue that would see Dongfeng and the French government acquire stakes in the French carmaker, sources have said.

The Financial Times, which cited anonymous sources, said the two automakers are planning joint production of small cars for Southeast Asian markets, underpinned by a transfer of unspecified technologies.

PSA had no immediate comment on the report, which was published by the newspaper Wednesday.