PARIS -- PSA/Peugeot-Citroen is boosting production at its factory in Mulhouse, eastern France, to meet raising demand caused by scrapping incentives in Europes key markets.
"It's obvious that scrapping incentives in many European countries are sustaining the market, but we don't know if this will last," a PSA spokesman said.
Subsidies of 1,000 euros to 5,000 euros are being paid in Germany, Italy and France to people who trade in their old cars for newer, more fuel-efficient models.
PSA immediately will boost output by 170 cars, raising Mulhouses production to 1,268 units daily in May.
To squeeze an additional 188 units of output from the factory, PSA will add a third shift June 22 and hire 480 temporary workers. The changes will increase production to 1,456 units a day, a level PSA plans to meet until September.
The Mulhouse factory produces the compact Peugeot 308 and Citroen C4 as well as the subcompact Peugeot 206+, which is a restyled and less-expensive version of the small 206.
The French carmaker's decision to boost output at Mulhouse comes just days after rival Renault announced that it will add a third shift in its Vallodolid, Spain, factory to boost production of its new Megane compact car.
Both Renault and PSA have been cutting production since mid-2008, as weak demand drove down sales and swelled inventories across the core European market.
PSA reported in April that it had reduced output by 39 percent during the first quarter of 2009, helping it drive inventories down 21.4 percent versus levels seen in the first quarter of 2008.
The French carmaker's worldwide unit sales were down 18.7 percent, to 713,000 units, during the first quarter of 2009, versus 876,000 cars sold during Q1 2008.