PSA/Peugeot-Citroen opened a third assembly plant in China today, expanding in the world’s largest vehicle market even as a slump in European demand prompts it to cut jobs at home.
The factory, opened with Dongfeng Motor Corp. in Wuhan in China’s central Hubei province, will produce the Citroen C-Elysee and Peugeot 301 sedans and increase the company’s annual capacity by two-thirds to 750,000 units by the end of 2015.
PSA’s expansion in China contrasts with its job cuts in France. The money-losing Paris-based automaker, which produced 40 percent of its vehicles at home last year, reported a 576 million-euro ($750 million) operating loss last year and has started implementing a restructuring plan that includes closing a factory on the outskirts of the capital and eliminating 11,200 positions in the country.
PSA’s reliance on Europe has “amplified” its problems, he said. European car sales fell to a 20-year low in May as record joblessness caused by a recession in the euro area reduced demand at PSA, Renault, Fiat and General Motors.
Political leaders are seeking ways to revive a shrinking economy weighed down by the sovereign-debt crisis, with unemployment in the 17 countries using the euro reaching a record 12.2 percent in April.