French car firm Peugeot has said that it will go ahead with a plan aimed at helping the company generate about 1.5bn Euros in cost savings after the company posted a loss of 819 million euros for the first half of the year.

The automaker said that its sales during the first six months fell by 5.1 per cent. The huge loss during the period resulted in group's bottom line going into the red. The company had warned that its earnings will turn negative at the time of announcing 8,000 French job cuts and a plant closure earlier in the month.

Executive Philippe Varin said in a statement on Wednesday that, "The depth and persistence of the crisis impacting our business in Europe requires the launch of the reorganization. We have a clear understanding of how hard this project is for a large number of our employees."

The company is trying to convince the unions in talks about its decision to cut 10 percent French workforce. It says that the reduction in workforce would help it generate 1.5 billion euros in savings by 2015. The company has managed to reduce its debt by 1 billion euros since 2011 but still has debts amounting to about of 2.4 billion euros.