The latest announcement was on the top of 6,000 jobs reduction already announced last year.
Peugeot said in a statement that it would cease production at its Aulnay site near Paris, which employs more than 3,000 workers, by 2014.
The job cuts would hit Aulnay, alongwith with the group's plant in Rennes, where it would axe 1,400 of its 5,600 jobs. In addition, a corporate restructuring would lead to another 3,600 job losses across France.
"I am fully aware of the seriousness of today's announcements, as well as of the shock and emotions they will arouse in the Company and its stake holding environment.
"The depth and persistence of the crisis impacting our business in Europe have now made this reorganisation project indispensable in order to align our production capacity with foreseeable market trends," Chief Executive Philippe Varin said.
Peugeot, which is struggling to cope with diving demand of cars from the European markets, said in the first half of 2012, its sales have fallen by 10 per cent as the company is "very exposed" to demand in Southern Europe.
Peugeot said it has been is consuming about 200 million euros in cash per month since mid 2011. It said the company expects a net loss in the first half of 2012, and a 700 million-euro operating loss for the core automotive division.
"This measures is expected to help operating cash flow return to break even by the end of 2014," Peugeot said.
The company is expecting a new alliance with General Motors Corp would allow it to return to long-term profitability.
Peugeot said all the measures to restore the Group's performance and financial position would be described in detail during the presentation of its interim results on July 25.
