The joint-venture talks between General Motors and PSA Peugeot Citroen have reportedly broken down as a result of the French automaker's deepening financial crisis.

Sources familiar with the matter have told Reuters that General Motors has misgivings about PSA's government-backed bailout of their lending arm last month.

While the talks are currently on "pause," both companies are still interested in a deeper tie-up. However this is now unlikely to occur before 2014. As one source explained, "The government bailout conditions rule out French job cuts, which means a deal can't happen any faster. It would be politically impossible to have all the cuts falling on the German side."

As we have previously reported, the proposed joint-venture would combine Opel, Vauxhall, Peugeot and Citroën into a new business entity. The exact benefits are unknown, but GM reportedly wants the joint-venture to happen so they can get Opel's losses off their books.

Gallery: GM-PSA Peugeot Citroen joint-venture talks break down - report

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