PSA Peugeot Citroen and Mitsubishi Motors Corporation (MMC) have abandoned plans for an equity stake swap as part of a closer strategic tie-up.

The two carmakers gave no explanation for the about-turn, which was announced following a meeting between the two group's executives in Geneva.

However, there have been suggestions that the reciprocal share stakes plan was scuppered by disagreement over the valuations of the respective companies.

The public statement issued today was notably brief.

“Philippe Varin, CEO of PSA Peugeot Citroen and Osaumu Masuko, president of Mitsubishi Motors have met in Geneva on March 2, on the occasion of the Motor Show,” said the statement.

“They confirmed the intent to broaden the current successful cooperation of the two companies. They also concluded that a capitalistic alliance was not appropriate in the current circumstances.”

The two companies in December said they were discussing extending their relationship, which already includes a number of joint manufacturing projects. Sharing vehicle platforms and working more closely in parts procurement or sales were areas being looked at.

Some reports said PSA was planning to buy a 30 to 50% stake in debt-laden MMC which would have meant taking effective control and creating the world's sixth largest automaker.

Golding on PSA and MMC in January

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