Peugeot to axe 700 jobs at Coventry

The French-owned car maker Peugeot-Citroen is to axe up to 700 jobs at its Ryton plant, in Coventry, because of falling car sales in continental Europe.

The French-owned car maker Peugeot-Citroen is to axe up to 700 jobs at its Ryton plant, in Coventry, because of falling car sales in continental Europe.

Peugeot announced yesterday that it is to scrap the fourth shift at the Ryton plant, which makes the best-selling 206 model. The 700 employees on the shift have been given 90-day redundancy notices.

The company said the decision had been forced on it by the decline in Europe's car markets, in particular France, which accounts for a fifth of Ryton's output. French car sales fell by 6 per cent last year and are down by 7.5 per cent so far this year.

Tod Evans, the chairman of Peugeot-Citroen UK, said: "It is clear that it is unsustainable to maintain current levels of production of the 206 and it was inevitable that Ryton would be affected. Even though the 206 was Europe's best-selling car last year, sales were down by 45,000 on 2002 levels.

Peugeot had already reduced production of the 206 at the two French plants which make the car. Ryton was the only plant operating on four shifts - partly because it is the sole source for the sports estate and Gti versions of the 206. Last year Ryton produced 210,000 cars. Output this year is likely to be nearer 160,000-170,000.

Mr Evans said the cutbacks at Ryton had no bearing on its long-term future. The company has applied to the UK government for £57m in state aid as part of a planned £600m investment, which would see the Ryton plant rebuilt in order to produce a new range of models from 2008.

The Peugeot Citroen chairman Jean-Martin Folz said last month that production at Ryton would continue until at least 2008. He said Britain remained a profitable market despite the appreciation of the euro, which wiped £209m from its profits last year.