PSA Peugeot Citroen has announced plans to close an assembly plant to address losses and overcapacity.

It will close its Aulnay small car factory, near Paris, in 2014 and reduce its total headcount by 8,000 through cuts at several other sites, including Rennes which builds the Peugeot 508 and Citroen C5 and C6.

PSA said it expects to post a loss in the first half of this year, but to return to breakeven by the end of 2014.

The carmaker's plants are working at well below capacity as it struggles to build cars as competitively as carmakers with assembly facilities in Eastern Europe.

The Aulnay site, which opened in 1972 and currently builds the C3, will be converted into other activities with new positions created for around half of its 3,000 employees.

In the UK, Citroen is moving its headquarters from Slough to share Peugeot's Coventry base.