Peugeot cuts 8,000 jobs to end losses, shuts plant

PSA Peugeot Citroen said on Thursday that it would cease production at its Aulnay site near Paris which employs 3,000, and cut 1,400 jobs from its plant in Rennes.

By AGENCIES

FRANCE’S biggest carmaker will slash 8,000 jobs from its domestic operations, as a sharp downturn in the European market saw the region’s car sales drop for a fifth straight year.

France's biggest carmaker will slash 8,000 jobs from its domestic operations, as a sharp downturn in the European market saw the region’s car sales drop for a fifth straight year.

The move sparked a fierce response from the unions, which described the announcement as a "declaration of war" and an "earthquake". In addition, some 3,600 jobs will be cut across the corporate structure, as the company continues "reducing costs and improving its operating efficiency."

The move sparked a fierce response from the unions, which described the announcement as a "declaration of war" and an "earthquake," with the hardline stance certain to add to the problems facing the new Socialist government led by Francois Hollande.

PSA said it expected the European market to shrink 8pc this year, and had to adjust its business in the face of a worsening outlook.

For the period 2007-12, the market is down 23pc, it said, compounding problems which left its plants operating at just 76pc of capacity in the first half of this year.

PSA said the problem was even worse in the small car segment, which accounts for 42pc of its sales "and where most of the competing models are made in low-cost countries".

As a result, the auto division is expected to report an operating loss of some €700m (£632m) for the first half of 2012, producing overall a net loss for the period.

“Peugeot is more exposed to south European countries and France in particular, which partly explains the poor sales performance, Sascha Gommel, analyst at Commerzbank, told Bloomberg.

“But more broadly speaking, it seems to be stuck in the middle between Volkswagen at the top of the market, and Hyundai/KIA at the bottom.”