Peugeot to cut up to 3,550 jobs as sales dwindle

By Caroline Jacobs and Helen Massy-Beresford

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

The company, which only trails Volkswagen in terms of European sales, said it would cut 2,700 jobs across its sites in France, where it had a workforce of 114,000 in 2007.

It also planned a separate voluntary redundancy plan at its Rennes plant for 850 executives and professional workers affected by the dip in volumes at the site, which makes mid-range and high-end vehicles, a market segment in decline.

"The problem is linked to the current climate but is structural too" at Rennes, where it makes the Citroen C5 and C6 models, a Peugeot spokesman said.

About 900 workers from the site will also be redeployed to other Peugeot factories, the group said.

It forecast sales volumes for the market as a whole would drop 17 percent in the final quarter of this year in main European markets and by at least 10 percent in 2009.

Peugeot made the announcement as the European Union is considering support for its ailing carmakers as part of a broad package of measures to stimulate the 27-nation bloc's economy and address the worst financial crisis in 70 years.

Human Resources Director Jean-Luc Vergne said Peugeot had to act or else it would put the future of the carmaker and its 200,000 jobs worldwide in danger.