PSA/Peugeot-Citroen will seek further plant cuts from French unions to reduce overcapacity, CEO Philippe Varin said. Varin said that production line shutdowns were “exactly the discussion we are having” but said he would present cutbacks to unions before announcing details.

Asked whether more than one line would have to go, Varin replied: “That is part of the negotiation. It also depends on our assumptions for the market and our market share.”

PSA is closing its Aulnay factory near Paris, which builds the Citroen C3 and has shrunk several domestic plants in recent years, leaving those remaining with two production lines — such as Mulhouse and Sochaux in eastern France, or Poissy near Paris — most vulnerable to further cutbacks.

“Clearly there is more flexibility at factories with two lines than those with one,” Varin said. “The choices to be made are a matter for discussion and negotiation.”

Unions reacted with surprise to the CEO’s comments. “All I can say is that this discussion has not happened yet,” said Franck Don, an official with the moderate CFTC union. “Downsizing has already happened as far as I’m concerned, so I’m astonished that it’s coming up again.”

Varin reiterated the automaker’s forecast for a 5 percent decline in Europe this year but said PSA’s market share in the region should improve in the last quarter.

Varin said PSA is expecting a slightly positive growth in Europe in 2014. “The worst is behind us,” he said.

The Peugeot and Citroen brands had a combined European market share of 11 percent in the first half, a decline from 12 percent a year earlier, according to figures from the ACEA carmakers’ lobby. That compares with 13 percent in the first half for Volkswagen Group’s namesake brand. VW is Europe’s largest automaker.

Peugeot brand chief Maxime Picat said that sales of the new 308 compact and 2008 crossover may help the company beat a target of reducing its cash consumption by 50 percent in 2013.