PSA, France’s biggest carmaker and second in Europe to Germany’s Volkswagen, said it expected the European market to shrink 8.0% this year and had to adjust its business in the face of a worsening outlook.
For the period 2007-12, the market is down 23%, it said, compounding problems which left its plants operating at just 76 percent of capacity in the first half of this year, down from 86% a year earlier.
PSA said the problem was even worse in the small car segment, which accounts for 42% 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 700 million euros (US$860 million) for first half 2012, producing overall a net loss for the period.
PSA said in a statement that it would cease production at its Aulnay site near Paris which employs 3,000, with the 1,400 jobs going at its Rennes plant.
In addition, some 3,600 jobs will be cut across the corporate structure, as the company continues “reducing costs and improving its operating efficiency.”