Peugeot Citroen may cut 5000 jobs in Europe

French auto giant PSA Peugeot Citroen is likely to cut 5,000 non-production jobs in Europe in a cost-cutting effort, the company said on Wednesday.

The announcement comes shortly after the automaker lowered its full-year profit forecast as increasing competition to cut car prices eats into profit. However, overall sales were up 3.5 percent in the third quarter to 13.45 billion euros.

“These organisational measures could result in the reduction of 2,500 jobs in Europe in 2012,” PSA said in a statement, adding that a further 1,000 manufacturing jobs would be cut next year.

The company said it would cut costs by €800 million ($1.11 billion) in 2012, to be split between fixed cost reductions and lower purchasing costs, in addition to a cost-savings plan that is already being executed.

Is clear that the Eurozone is in deep problems, and the announcement marks this.

The chairman of PSA’s board of directors Philippe Varin said: “This could concern 10 percent of the workforce.”

A spokesman clarified that the 10 percent could come from the around 50,000 people employed in Europe and not linked to production AFP reports.

In addition, the two-companies are planning temporary work stoppages at some factories as the European sovereign debt crisis hits demand for vehicles.

Peugeot said it expected Europe’s car market to remain stable this year, grow by almost 7 per cent in China, almost 6 per cent in Latin America, and 30 per cent in Russia.

Shares in PSA fell as much as 5.7 percent, making them the biggest fallers on the European index of automakers and auto parts suppliers .SXAP.