LONDON -- PSA Peugeot Citroen on Sunday said it would cut 850 jobs at a factory in England because of a fall in sales.
Peugeot said increased competition in the small-car market had hit sales of its 206 model, forcing it to cut staff at its Ryton plant in Coventry, central England.
"PSA Peugeot Citroen has to review its manufacturing strategy for the car and to adjust its output in line with market demand," the company said in a statement released in London.
It said steps taken since the start of the year to match production to lower demand were no longer sufficient. Peugeot employs about 2,800 people at Ryton, which began building the 206 model in 1998.
Europe's second-biggest carmaker posted a fall in 2004 earnings last month after a year dogged by sluggish demand and strong competition in Europe and high raw material costs.
PSA called 2004 "a year of transition" toward stronger growth, after a tough 2003, when motorists shunned its ageing product range in favor of new models from rivals.
It launched a number of new cars in 2004, including the Citroen C4, the remodeled Citroen C5 and the Peugeot 407 saloon, the first stage of a product drive aimed at restoring its position as Europe's most successful mass-market carmaker.
The company said it hoped to cut the jobs through voluntary redundancy and early retirement.