Struggling Peugeot hit by 819 million euro loss

Published:  26 Jul at 11 AM

Following an announcement that it will be axing 8,000 jobs and closing down one of two Paris factories, carmaker Peugeot has declared losses of 819 million euros for the six months ending in June. This is compared to an 806 million euro profit during the same period a year ago.

Peugeot has predicted that it is unlikely to begin breaking even again until 2014. The loss is double what was predicted as the French government announces its support plan for the auto industry.

Businesses are to receive a cash injection of 500 million euros and greater cash incentives are to be offered to those buying new hybrid or electric cars. The government is currently looking at a number of ways to reindustrialise the French economy.

Peugeot is suffering at the current time because of the economic problems in the eurozone. Philippe Varin, the firm’s chief executive, said the impact of the situation in Europe was part of the reason that reorganisation is necessary.

President Francois Hollande, whose government came to power on the promise of revitalising France’s manufacturing industry, said that the job cuts at Peugeot were unacceptable. The unions have also said that the situation is tantamount to a declaration of war. The company’s chairman, Thierry Peugeot said that making criticisms of the firm was damaging to investor confidence and could leave Peugeot vulnerable to a hostile takeover.