Peugeot is slashing production of the 1007 just six months after its launch because sales for the premium-priced small minivan are far below expectations, according to Automotive News Europe.

PSA/Peugeot-Citroen will cut 1007 production capacity at its Poissy plant near Paris to 70,000 units a year, far less than the 130,000 annual units Peugeot anticipated when it launched the car April 18.

Additionally, PSA will lay off 550 temporary workers by the end of the year and move another 150 workers to other jobs.

Poissy also builds the 206, the best-selling car in the automaker's history. That car will be replaced next year with the 207.

"One of the 1007's problems is pricing and the fact it is a new segment," a Peugeot spokesman said.

Georges Chetochine, an independent marketing consultant, cited Peugeot's belief that one particular feature on the 1007 would attract buyers. Instead of conventional doors for the driver and passenger, the vehicle has electrically operated doors that slide open.

"People don't buy doors, even sliding ones," Chetochine said.

The 1007's sales troubles echo those of its French rival, the Renault Modus. Renault's premium-priced small minivan, launched in September 2004, also has been selling poorly. Renault has cut Modus production three times in the last 14 months. Modus production is now 560 units a day, down from the 1,300 initially planned. At the industry standard 220 annual days of production, that's a change to 123,000 units from 286,000.

The disappointing sales for the 1007 and Modus are a big blow to the French automakers who introduced both vehicles at the 2004 Paris motor show as trail-blazing products. It highlights French brands' continued difficulty in selling small cars at a premium, unlike BMW's Mini brand.

When they were launched, the base versions of the 1007 and Modus cost EUR13,000 ($US15,000). That compares with EUR11,800 for the larger Clio III, another small car Renault is just launching, and EUR9,000 for a Peugeot 107 mini, launched in June.

The two small minivans also have failed to woo customers away from small SUVs. Such SUVs are a fast-growing segment, but the French carmakers' first SUVs will not arrive until 2007.

The Peugeot spokesman said the five-month delay in the 1007 launch also hurt sales. It took Peugeot longer than expected to get the electronically powered, sliding doors to operate properly. Consequently, the 1007's late April launch nearly coincided with the smaller 107's introduction in June.

Modus production now halved