DETROIT General Motors Co (GM.N) said it may have to write down the value of its 7 percent stake in French automaker Peugeot SA (PEUP.PA) owing to the deepening fiscal crisis in Europe that has hurt vehicle sales in the region and stock prices.
GM said the economic uncertainty was "weighing heavily" on the value of its stake in Peugeot, according to a quarterly regulatory filing.
The largest U.S. automaker also described the decline as "temporary." GM announced an alliance with Peugeot a little more than five months ago.
"Should market conditions not recover in the near-term, we may conclude the impairment is other-than-temporary, resulting in an impairment charge," GM said.
GM paid 320 million euros, or $423 million, for its stake, according to a March regulatory filing. Based on Peugeot's current market value, a 7 percent share of the company is worth 146 million euros ($180.16 million).
"We currently have the ability and intent to hold the investment until its fair value recovers," GM said.
The disclosure comes a day after GM reported better-than-expected results in Europe. GM executives acknowledged that region -- where the company sells the Opel and Vauxhall brands -- remained challenging.
GM shares were up 4.5 percent at $20.00 on Friday afternoon on the New York Stock Exchange.
(Reporting by Deepa Seetharaman; editing by Matthew Lewis)