PSA to build next Citroen C3 compact in Slovakia: sources

By Reuters

May 22, 2014 08:45 AM EDT

(Reuters) - PSA Peugeot Citroen plans to build its next C3 compact model in Slovakia instead of France, sources close to the French carmaker told Reuters on Thursday.

The move is part of a strategy to switch production of mass-market small cars away from Western Europe where costs are considered too high and instead build higher-end models in the region.

"They're starting technical operations on the new Citroen model in the coming weeks... it's going to be in Eastern Europe, in Trnava," one source close to the matter told Reuters.

Two other sources close to the car group confirmed that a decision had been made to produce the future C3 in Slovakia, where the company already builds the C3 Picasso multi-purpose vehicle and the Peugeot 208.

A PSA spokesman declined to confirm the production move, adding that the carmaker never unveiled such plans in advance. He said PSA had pledged to preserve its French factories as part of a labor deal signed last year.

PSA Chief Executive Carlos Tavares and his predecessor Philippe Varin have repeatedly said it was no longer viable to produce mass-market small cars in France because tough competition meant prices on such models were too low to cover the production costs.

Tavares is expected to face questions from unions on Friday during a factory visit in Poissy, near Paris, where the C3 is currently produced for the European market along with the premium DS3 model.

(Writing by James Regan; Editing by Leila Abboud)

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