French carmaker PSA Peugeot-Citroen is cutting 10,000 jobs, or seven per cent of its European workforce, and is imposing a hiring freeze as it tries to cut costs amid a sales slump in Europe.
Europe's second-largest automaker after Volkswagen AG said late Tuesday it plans to cut costs by 125 million euros (US$158 million) in the second half of the year.
The company said it will cut jobs in part by not replacing people who leave or retire. Peugeot currently employs 133,500 people in Europe.
The company is also cancelling construction of a second assembly plant at its Trnava, Slovakia, facility. Peugeot had budgeted 350 million euros ($444 million) for the plant, which was planned for a new model that will be launched in 2010. Assembly will now take place at existing facilities, saving 200 million euros ($254 million).
Coming on the eve of the Paris Motor Show, the cost cuts are the latest signal of the vulnerability of western European and U.S. carmakers as they face competition from Asian rivals and weak demand in their home markets.
Peugeot has missed its profit targets three times in the past 12 months. In July, the company blamed rising raw materials costs, weak European sales and fierce competition for a 60 per cent plunge in profit in the first half of this year.