Peugeot Citroen cut car production by 18%

The second-largest automotive group in Europe, Peugeot Citroen announced a reorganization of its production facilities in France, involving a reduction of 8000 people, to restore competitiveness and sustainable activities in the future, the company said.

"The business environment deteriorated in the first half of 2012 - the demand for cars in Europe, according to preliminary data, decreased by 8%, although at the beginning of the year is expected to decline by 5%. As a result of the prevailing conditions the company may report a loss for the first half." the company said.

Peugeot Citroen in the light of reduced demand for cars, which for the company was 10%, cut car production by 18% in the first half. Automotive division may report operating losses for the first six months of 2012 amounting to 700 million euros.

Given this situation, the company decided to take a number of measures aimed at stabilizing the situation. In particular, the company plans to cease production at Aulnay in 2014. The plant employs 3000 staff.

In addition, the company plans to adjust production at Rennes, which produces Peugeot 508, Citroen C5 and C6. As a result, the staff of the plant can be reduced by 1.4 thousand and 5.6 thousand employees.

The company plans to offer employees who got laid off, jobs at other plants. In addition, the company plans to lay off 3.6 thousand people at other plants in France.

Earlier in July, the company reported that worldwide sales of new cars in the first half of 2012 declined in comparison with the same period of last year to 10.7% - up to 1.619 million units.

PSA Peugeot Citroen is the second largest producer of cars in Europe after Volkswagen AG. Automaker, whose headquarters is located in Paris, was formed through the acquisition by Peugeot 90-percent stake of Citroën in 1976. The general staff of the company amounts to 186 000 employees.

Job cuts in such a large company may have a negative impact on the Euro.