PSA Peugeot Citroen needs to axe 6,000 jobs in France, 10% of its workforce there, between now and 2012 in order to boost productivity by 20%.

Chairman Philippe Varin, outlining the group's 2010-2012 performance plan, said the reductions would come through the non-replacement of workers as they leave the company voluntarily and he ruled out any further supplemental restructuring plan.

PSA launched a voluntary departure scheme at the beginning of the year for non-production staff. This later included other workers and by the end of October the workforce had been trimmed by 4,800.

Varin said that job cuts this year for PSA worldwide, including its auto parts unit Faurecia, come to around 13,000. He predicted that the vehicle sales fall in Europea market would be less than 10% following a 7% contraction in 2009.

He described the Asian market as the company's main challenge, adding that the region would be the growth driver for the global auto market in the next few years.

PSA shares surged yesterday after the group raised its earnings forecast for 2009 on what it said was a revival in the auto market. It said in a statement: "Due to recent improvement in the automobile market and the ongoing success of the new Peugeot and Citroen models, the group's production and sales performance is significantly stronger than forecast."

The company forecast output in the fourth quarter would be 30% higher than the same period last year up 17% on the third quarter. As a result recurring operating income for the second half was expected to break even and full-year cash flow set to be positive.

PSA reported a loss of EUR962m (USD1.44bn) in the first six months of the year but government incentive schemes to encourage car purchases have since boosted car sales in Europe and the US.