France - Auto giant PSA Peugeot Citroen is planning to slash thousands of jobs in Europe as part of an €800m (R8.7bn) cost-cutting plan amid a stagnating European car market.Nearly 6800 jobs among group employees and sub-contractors are at risk and the group announced to unions that 800 temporary positions would be cut by the end of 2011.The job cutting measures would continue in 2012, as a further 1000 manufacturing jobs would be cut through voluntary departures. Up to 2500 non-production positions would be eliminated and another 2500 jobs were expected to be lost by ending outsourcing contracts.The cost-cutting programme comes after the company announced that sales in its automotive division fell by 1.6% to R102bn in the third quarter. However, overall sales rose 3.5% to R147bn euros.'SCANDALOUS'PSA said: "The competitive environment has become more challenging due to pricing pressure, which has intensified in Europe since September. In this tougher environment, recurrent operating income for the automotive division is now expected to be close to break-even for the full year."The company, France's largest automaker and Europe's second-largest after Volkswagen, employs more than 205 000 people around the world, including 167 000 in Europe.The new plan follows the announcement of a programme in 2009 which aimed to save a total of R40bn.Union representative Bruno Lemerle slammed the plan as "scandalous."Lemerle said: "Logically when the results are good, the company should employ people, try to develop. Our workload is excessive as it is, we don't need a reduction in the workforce."FRENCH INDUSTRYWith two manufacturers, PSA and Renault, France's auto industry is key to the country's economy and accounts for around 10% of the total national workforce.PSA chief Philippe Varin met French industry minister Eric Besson after the announcement and insisted that the group's manufacturing presence in France was not in question.PSA chief financial officer Frederic Saint-Geours said during a teleconference the company expected growth in the European market to stabilise, but for sales to grow seven percent in China, six percent in South America and 30% in Russia.The company said it plans to make new investments to double its production capacity in Brazil.