video transcript

Downing tools in an attempt to save their jobs. Peugeot's factory in Aulnay-sous-Bois in the Paris suburbs is earmarked for closure in 2014. The struggling French car maker PSA Peugeot Citroen is trying to reduce costs and cut 8000 jobs. The firm has lost 200 million euros a month over the past year. It's not the only European car maker desperately trying to restructure, but Peugeot is leading the way. Now a French goverment-commissioned report has criticised PSA's decision to shut the Aulnay plant. It says it can't tackle its losses by simply cutting costs. And it warns Peugeot not to damage its research and development, by reducing staff. But this striker says the report won't make any difference. SOUNDBITE: CGT UNION MEMBER AND FACTORY EMPLOYEE FRANCOIS BOETHAS SAYING (French): "Whatever the experts' report says, the Peugeot family and the PSA managers do what they want." The report is just the latest piece of bad news for Europe's second-largest carmaker by volume . General Motors has backed away from its plans to share its mid-sized car technology with PSA. And the French firm will be dropped from the country's blue chip share index the CAC 40 later this month. That will affect the liquidity of its stock, although Carlos de Silva from IHS Global says the damage will be largely symbolic. PSA's reliance on the European market is a bigger problem. SOUNDBITE: Carlos de Silva, Auto analyst, IHS Global Insight, saying (English): "I like the draw the comparison with Volkswagen. They basically went to China at nearly the same time, around the same year twenty or so years ago. Today Volkswagen has a market share in China of 11, nearly 12 percent and PSA is around 2 or 3 percent with two brands. So it just shows the extent of the strategy that Volkswagen was able to implement with the Chinese operation." Four years after recession led to a global slump in car sales, European auto makers are still producing more cars than they can sell. U.S. makers slashed their production capacity back in 2008, but Europe has only just begun talking about it. It's now on the agenda at Peugeot, General Motors' Opel division and Italy's Fiat. It may not be popular with the industry's workers but it seems the need to restructure is now increasingly urgent. Joanna Partridge, Reuters.