PSA Peugeot has cut temporary staff at its Hubei-based Dongfeng Motor joint venture as sales fall.

The venture laid off 1,000 contract staff from a total of about 9,000 employees, PSA Peugeot China told the South China Morning Post.

“The workers were mainly on short-term contracts, which weren’t renewed from 1 November,” a spokesman said. “It’s normal for the industry to adjust manpower pertaining to sales conditions. When the sales go up again, we’ll hire those staff back.”

There have also been recent reports of temporary workers – many foreign guest workers – being laid off at plants in Japan.

The Chinese paper noted that Dongfeng Peugeot Citroen general manager Liu Weidong had said last February the automaker expected to produce and sell 280,000 vehicles on the mainland this year, up 30% year on year.

But company data showed it sold just 147,000 units in the first nine months, up 1.3%. The spokesman said PSA Peugeot had since cut this year’s sales target to 200,000 units.

Industry sources have said Chery Automobile, Dongfeng Peugeot Citroen, Changan Ford Mazda and Anhui-based Jianghuai Motor have also begun to cut staff because demand for vehicles was under pressure.

And Volkswagen China, the biggest overseas carmaker in the country, said last week that the “worst may be yet to come”.

That joint venture with SAIC Motor is also adjusting production to cope with falling demand.

The spokesman said, however, PSA Peugeot’s expansion plan in Wuhan, Hubei province, was unchanged and the new plant would produce more expensive medium and high-end vehicles.

The plant is expected to start production in 2010 with annual capacity of 300,000 units. PSA Peugeot and Dongfeng Motor will share the investment cost but the amount has not been disclosed.

Sales have also begun to slip in another formerly booming emerging market, Brazil.

As just-auto reports today, four major automakers there are imposing production shutdowns, with Ford extending Christmas holiday breaks.