PSA to move Citroen C3 output to Slovakia from France, sources say

The C3 was Citroen's best-selling model in Europe last year with volume of 149,794.
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PARIS (Reuters) -- PSA/Peugeot-Citroen plans to build its next C3 subcompact in Slovakia instead of France, sources close to the French carmaker said. The move is part of a strategy to shift production of low-margin small cars away from western Europe, where costs are considered too high.

The C3, which is made in Poissy, near Paris, is Citroen's best-selling model in Europe with sales of 48,614 units in the first four months of the year, according to JATO Dynamics. The car accounts for more than 20 percent of Citroen's vehicle sales in the region.

"They're starting technical operations on the new Citroen model in the coming weeks ... it's going to be in eastern Europe, in Trnava," one source close to the matter told Reuters.

Two other sources close to the car group confirmed that a decision had been made to produce the future C3 in Trnava, where the company already builds the C3 Picasso minivan and the Peugeot 208 subcompact.

"Citroen will produce about 10 percent of the C3 models in Poissy and the rest in Slovakia,” Jean-Michel Prillieux, an analyst at Inovev, told Automotive News Europe. Prillieux added that while this meant production at the Poissy plant would likely decrease from 300,000 units to 200,000 units per year by 2016 this would not threaten the plant long term.

A PSA spokesman declined to confirm the production move, adding that the carmaker never unveils such plans in advance. He said PSA had pledged to preserve its French factories as part of a labor deal signed last year.

PSA CEO Carlos Tavares and his predecessor, Philippe Varin, have repeatedly said it was no longer viable to produce mass-market small cars in France because tough competition meant prices on such models were too low to cover the production costs.

The average labor cost for an auto worker in France is 57 euros an hour compared with about 15.50 euros an hour in Slovakia, according to data from Eurostat.

Tavares is expected to face questions from unions on Friday during a factory visit in Poissy, where the C3 is currently produced alongside the Citroen DS3 and Peugeot 208.

Bruce Gain contributed to this report

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