PSA Peugeot Citroen chairman Philippe Varin has said the company will close no more factories in France.

Together with human resources chief Philippe Dorge, a new PSA social contract has been drawn up with a view to maintaining the Group's manufacturing presence in Europe, particularly in France, with measures designed to “revitalize and enhance the competitiveness of its French production facilities”. The target of full capacity utilization in the Group's European plants as of end 2016 was also confirmed.

If the contract is signed, PSA will maintain its production levels in France over the course of the Medium-Term Plan. In 2013, it expects to build around 930,000 Peugeot and Citroën vehicles in France. Based on demand and market share forecasts - assuming a European market of 15m vehicles in 2016 - PSA's French output should stand at around 1m vehicles by then.

A statement by the Group added: “No plants or facilities will be closed” Varin also committed to launching at least one new model in each assembly plant in France between now and 2016 and the projected level of output would help maintain component and foundry operations in France, which manufacture engines, gearboxes and suspension systems, as well as providing logistics and replacement parts services.

The model launches and production output will require an investment of EUR1.5bn said Varin who added: “The commitment to maintaining and increasing production output in France goes hand in hand with a critical need for flexibility in our plants and a target for capacity utilization in Europe. As part of the Master Plans and Medium-Term Plan.

PSA also pledged to carry out more than 75% of its R&D activities in France in 2016 representing an important commitment for the future, given the growing percentage of R&D conducted in the Group's priority growth regions, especially China.

It means that France will remain home to PSA's strategic R&D processes, particularly upstream research and engineering, powertrain design and development, platform module design and developent and, in a majority of cases, new body style development.

The commitment will maintain operations at all of PSA’s R&D facilities in France, including the upstream research and engineering centres in Vélizy and La Garenne that oversee research, innovation, the modular strategy and upstream design and engineering on behalf of the entire Group; the development centres generally located near the plants in La Garenne, Sochaux and Vélizy; and the test centres located near the development facilities in Carrières-sous-Poissy, Belchamp and La Ferté Vidame.

See also: FRANCE: Unions mull PSA 1m volume commitment in exchange for wage 'moderation'