Dongfeng Motor Corporation may reduce its stake in PSA group, Reuters quoted a source as saying on December 9, after having hired banks to study possible plans. The move could ease resistance to plans to merge PSA with FCA.

A few weeks ago, Dongfeng Motor solicited suggestions from banks to study its shareholding plan for PSA, the source said. One of the sources added that Dongfeng's goal is to submit a share sale plan to the board of directors in the next few days.

Three people familiar with the matter said Dongfeng plans to reduce its stake in the combined entity to a level acceptable to the Committee on Foreign Investment in the United States (CFIUS).

As a long-term partner of PSA, Dongfeng Motor currently holds 12.2% of the equity of PSA, and will hold about 6.1% of the equity after the merger of FCA and PSA. The latter two announced a merger in October to build the world's fourth largest auto maker.

The report also pointed out that due to the tense trade relations between China and the United States, Dongfeng Motor's reduction may help the transaction obtain the approval of the U.S. regulators. CFIUS, which examines whether foreign acquisitions pose a potential threat to U.S. national security, recently stepped up its scrutiny of Chinese acquisitions.

A person familiar with the matter said holding more than 5% of the combined entity would give Dongfeng a seat on the new company's board.

PSA did not comment on the above, while Dongfeng did not immediately respond.

In addition, according to reports from other media, Zhong Shi, an auto industry analyst, said that from the perspective of Dongfeng Motor, the current Chinese auto market downturn, car companies are facing great pressure. If PSA shares are sold at this time, it will help to improve the cash flow of Dongfeng Motor.

On October 31, PSA and FCA issued an announcement and agreed to carry out a preliminary merger. The announcement pointed out that once the two car companies merge, they will become the fourth largest car group in the world. The total annual sales volume of the new group will be 8.7 million vehicles, with a total revenue of nearly 170 billion euros and a total operating profit of more than 11 billion euros. The two companies hope to sign a formal memorandum of understanding on the merger in December.

In terms of market value, PSA's market value is about US $22.5 billion, and FCA's market value is US $22.3 billion. The merger could create a "50 billion dollar transatlantic auto giant" similar to Honda's.

According to the announcement of Dongfeng Group, Dongfeng Group invested 800 million euros in 2014 to acquire 14% shares of Peugeot Citroen Group. Up to now, Dongfeng Group holds 12.2% shares and 19.5% voting rights of Peugeot Citroen Group, according to Wind Data.