Loss-making PSA Peugeot Citroën intends to halt production at its Aulnay plant and cut more than 5000 jobs across its French production sites
Matt Burt
12 July 2012

PSA Peugeot Citroën intends to halt production at its Aulnay plant and cut 5000 jobs across its French production sites as part of a wide-reaching plan aimed at returning the loss-making company to financial health.

The French company's automotive division is expected to report an operating loss of 700m euros (approximately £550m) in the first half of 2012, and says it will end the six-month period with a net loss.

In response to that negative financial outlook, PSA Peugeot Citroën chairman Philippe Varin today presented a plan to reorganise the company's production base.

PSA's Aulnay facility is one of two in the Paris area that specialise in small car production. Aulnay currently produces the Citroën C3, while the second plant at Poissy makes the Peugeot 208 as well as the C3 and DS3.

Both sites are currently working under capacity. According to Varin's plan, car making at Aulnay, where 3000 people are employed, will cease in 2014 and Poissy will take over all production. Some of the employees will be redeployed at Poissy, while PSA says it will help others find alternative work in the Aulnay area.

On top of the closure of the Aulnay plant, PSA's reorganisation plan also proposes "a reduction of 3600 jobs across all of its facilities in France". Another 1400 jobs would be cut at the Rennes plant, which builds the Peugeot 508 and Citroën C5 and C6 and has been affected by the decline in European demand for large saloons.

The ongoing Eurozone crisis has stifled PSA Peugeot Citroën's attempts to reverse its own financial troubles, and the company's car sales have contracted by 10 per cent in the first six months of the year.

Another factor is the company's major reliance on the small car segment, which accounts for 42 per cent of its overall sales. Most of the competing models in the segment are made in low-cost countries, meaning they can be sold at more competitive prices than Peugeot and Citroën models.

PSA hopes that the reorganisation plan would return its financial situation to the 'break-even' point by the end of the 2014. The group will present its interim 2012 financial results on 25 July.       

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Comments
15

12 July 2012

Some of the competing models may be made in low-cost countries, but to say most are is inaccurate. The biggest-selling rivals for the C3 and 208 are the Polo, Fiesta and Corsa, all of which are made in, among other places, Germany. I don't beleive Germany is a low-cost country.

12 July 2012

When you are selling a car as a value proposition rather than a luxury or lifestyle item then you are always at risk of being undercut. DS3 and 208 seem to be good efforts but too many other substandard cars in the range, and not enough done to expand into the US and China where most other brands are making their cash nowadays.

12 July 2012

I believe the problem with the PSA Group is that it produces a range of cars that are, frankly, expensive when matches against the competition (chiefly from the Korean manufacturers) ...

12 July 2012

Obvious suitor would be Renault Nissan group - but I think they are afraid of the quagmire of French unions. That would leave us the normal option of China - but perhaps a good bet would be Land Rover - Jaguar - it would fit their MO nicely?

what's life without imagination

12 July 2012

i thought the c3 - ds3 sales were  through the roof, how come their plants are working under capacity?

they came, they saw, they lolled

12 July 2012

C6s are as rare as hens teeth and C5s arent exactly huge sellers. but I keep seeing a lot of 508s and thought they were doing well?

12 July 2012

FRENCH CARS ARE SHIT!GERMAN THE BEST

12 July 2012

It's a shame this. I've often passed the Aulnay plant on the way to Paris from CDG Airport, and seen all the cars lined up. I think the problem is that whereas the Saxo and 106 were once Citroen and Peugeot's best-selling little cars, that role has now been filled by the C1 (certainly for Citroen) and 107, which of course are being built elsewhere, rather than the larger and more expensive C3s and 208s. I don't see a huge amount of C3s around, possibly because it seems like a half-baked effort compared to the DS3, and is relatively expensive new. The DS3 has been outselling the C3, in the UK at least, comfortably. 

I think Citroen and Peugeot need to think carefully, because they may end up with quite a backlash on their hands. I remember when cuts were made at the Aulnay plant during the recession in late 2008, when workers rampaged through the Paris Motorshow on the day I went, vandalising the cars and stands. PSA need to avoid this again if possible, so I think they need to be more inventive than simply "shutting the plant".

Does anyone know what Aulnay was producing before the current C3? Was it always a one-model plant? Perhaps DS3 or 208 production should be shifted to Aulnay, because I can't imagine the C3 is selling better than either of those two cars.

"The creative adult is the child who survived."

amh

12 July 2012

Or the problem may be France in general. A lot of businesses have been hurt by the general downward trend, and on top of that their government raised taxes. Many companies find France very uncompetitive, might be the same in the auto industry.

12 July 2012

The deutsch Polo is fabricated in Spain!

And german cars are not perfect.

 

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