Peugeot says it is struggling with a sustained contraction in European demand that has seen sales drop 10 percent in the first half of 2012. The automotive division is expected to report a net loss for the first half of the year, the French carmaker said Thursday in a release.
Chairman Philippe Varin presented a plan to reorganize the automotive division's production base in France and to redeploy the workforce.
The company plans to cease production in 2014 at the Aulnay plant in the Paris suburb of Aulnay-sous-Bois, moving production to the nearby Poissy plant. Aulnay, which produces the Citroen C3, employs 3,000 people, the company said. Poissy currently makes the Peugeot 2008 and the Citroen C3 and DS3. Both plants are currently operating under capacity.
Production will also be cut back at the company's auto plant in Rennes.
"The depth and persistence of the crisis impacting our business in Europe have now made this reorganization project indispensable in order to align our production capacity with foreseeable market trends, Varin said. "The project presented today should enable the automotive division, the heart of our company, to get back on track and restore its ability to execute its strategy. In this way, we will secure the group's future and our car production base in France."