Plant closures and new faces as French brands try to fight slump

Peugeot Citroën has announced a major factory closure while rival Renault is putting a new man in charge of its European operation, as France’s two leading car makers try to combat falling sales.

Peugeot Citroën (PSA) will close the Aulnay plant near Paris by 2014, with the loss of 3,000 staff, a move that has been met with fierce criticism in France.

Opened in 1973, Aulnay currently builds the Citroën C3.

The company says around half the staff affected will be offered posts at Peugeot’s Poissy plant, also near Paris.

PSA also intends to cut 1,400 staff from its plant at Rennes in western France, and seek another 3,600 redundancies across other facilities in the country.

In total the company is said to be looking to shed 14,000 posts.

Announcing the move, PSA Chairman Phillipe Varin blames the “depth and persistence of the crisis” the company finds itself in, and describes the situation as grave.

“I am fully aware of the seriousness of today’s announcement, as well as of the shock and emotions they will arouse in the company,” he says.

PSA announced 6,000 job cuts in November and earlier this year revealed it was making a further £800m of savings.

On average PSA plants are only working at three-quarters of their capacity at present. Slumping sales of Peugeot and Citroën small cars, which account for 42 per cent of output, have deepened the gloom.

The company’s car-making division expects to post an operating loss of £5.5m for the first half of 2012. Its cash flow is not expected to return to the black until 2015.

Meanwhile French state manufacturer Renault, which is also facing mounting losses, has appointed its first specific head of European operations in a bid to turn round its performance.

Stefan Mueller, who heads the German motoring organisation ADAC, will become Chairman of Renault’s Europe region in September. He has previously held senior positions at BMW, Ford, Volvo and VW Group.

Renault announced this week that its European sales had fallen 14.9 per cent in the first half of 2012.

Words by: Andrew Charman