PSA Peugeot Citroen second plant in danger of closure – sources image

PSA Peugeot Citroen is seeking tax breaks or other support for its northern French Sevelnord plant before committing to build a new vehicle there, Reuters reports citing peoples close to the matter.

Peugeot declined to say whether it had requested aid for the plant.

“For Sevelnord, the main issue is to reach agreement with the unions, ” company spokesman Pierre-Olivier Salmon said.

The French giant and Toyota Motor Corp have signed an agreement that will see the French automotive group supply light commercial vehicles to its Japanese partner in Europe from mid-2013.

The partnership will see PSA produce a Toyota-branded medium-sized van based on its existing Peugeot Expert and Citroen Dispatchvehicles – much like the Fiat Sucdo, which is produced under a similar agreement.

But without improvements in competitiveness including labour concessions, PSA will unlikely to choose Sevelnord plant for a future generation of midsize vans – therefore the plant may be closed.

“Nothing has been signed yet but we are optimistic about the negotiations,” a Peugeot spokesman said.

Located near the city of Valenciennes, Sevelnord assembled 94,000 vans last year, of which 20,000 were for Fiat and the remainder for the Peugeot and Citroen brands.

PSA also manufacturers the Peugeot 807 and Citroen C8 large minivans at the Sevelnord plant.