Peugeot to cut more jobs as car crisis continues

PSA Peugeot-Citroen, Europe's second-biggest carmaker, announced a fresh wave of job cuts today as a decline in European car sales is seen continuing into 2009.

The firm, which only trails Volkswagen in European sales, said in a statement it plans to cut 2,700 jobs across its sites in France.

It forecast car sales volumes would drop 17 per cent in the final quarter of this year in main European markets and by at least 10 per cent in 2009.

Peugeot made the announcement as the European Union is considering support for its ailing carmakers as part of a broad package of economic stimulus measures in the 27-nation bloc to deal with the worst financial crisis in 70 years.

If Peugeot did not act it could have put the future of the carmaker and its 200,000 jobs in danger, Human Resources Director Jean-Luc Vergne said in a statement.

Peugeot would present the plan to its works council on Dec. 2. It also involves the re-assignment of some workers to different sites, mainly involving moves out of its Rennes site in Britanny.

PSA Peugeot Citroen slashed its 2008 profitability outlook in October and announced "massive" production cuts to combat the sales crisis that is hitting auto makers, after posting a 5.2 per cent drop in third-quarter turnover.

Peugeot shares were down 2.6 per cent at 12.98 euros by 0933 GMT, in line with the Dow Jones Stoxx European autos sector index. The share price was as low as 12.75 euros earlier in the day.

Car sales have fallen steeply as the effects of the global financial crisis have rippled out into the wider economy. Carmakers are slashing costs where possible and extending the usual plant idling over Christmas by a few more weeks to save cash.

In western Europe new car registrations in October plunged 15.5 per cent to just over 1 million vehicles, dragged down by extremely poor results at Peugeot, GM, Renault and Toyota Motor Corp.

Pressure on European leaders to help European carmakers intensified after U.S. Senate Democrats on Monday proposed a $25 billion loan programme for U.S. carmakers.

On Wednesday Toyota said it would cut its North America output and Nissan renewed its pessimism over the industry's near-term prospects