Peugeot and Citroen front ends

The French government has said that PSA/Peugeot-Citroën must make large job cuts in order to stay financially afloat. A large restructuring would also need to take place as the carmaker deals with the current European economic climate and a production capacity excess.

According to an Automotive News Europe report, the government of France launched an investigation into the "financial health" of PSA, and its results subsequently criticized several decisions the company made, including the shuttering of plants near Paris without leaving failsafe options for production like its Madrid factory.

The result of the study is that the French automaker plans on cutting 8,000 jobs – on top of the 3,500 axed last year. Also planned is the closing of its Aulnay plant near Paris, along with a significantly downsized workforce at its Rennes plant in western France. Last year, PSA's small car plants were running at only 61 percent of maximum capacity.

These job cuts will be augmented by a corporate restructuring, with the goal of an operating cash flow that breaks even by 2014. The report says that by then, the European car market may be in a state of recovery.