The closure of PSA’s Aulnay plant would reduce manufacturing costs by 200-250 euros per car image

French newspaper reports that the closure of PSA Peugeot Citroen’s Aulnay plant near Paris will reduce the French automaker’s fixed costs by 108 million euros $132 million.

According to the official documents, the plant closure would reduce PSA’s manufacturing costs by 200-250 euros per car, the French daily reported on Tuesday.

The Aulnay plant near Paris employs more than 3,000 workers and builds the Citroen C3 subcompact.
The factory will become the first French car plant to close in two decades, challenging new Socialist President Francois Hollande’s pledge to revive domestic industrial production.

“I know how serious these measures are for the people concerned, and for our entire company,” Chief Executive Philippe Varin told reporters.

“We have to stop the hemorrhaging and that’s why we are making this decision,” Varin said. “We can’t continue to operate with half-full plants.”

Peugeot, Renault SA (RNO) and Fiat SpA (F) this year posted the biggest declines in car sales in Europe, where Peugeot now expects the market to contract 8 percent. Moody’s Investors Service in March was the last of the three main credit-reporting companies to cut Peugeot’s debt rating to junk.