Union members vowed to try to fight back and plan protests later Thursday.
Company management announced the job cuts and closure plan during a meeting Thursday with its worker representatives.
The company, which warns it faces a first-half loss of €700 million ($858.2 million) this year, is trying to save €1 billion as it struggles to compete in Europe's fiercely competitive car market. It is suffering particularly amid a slump in sales in the recession-hit south of Europe. Its sales plunged 20 per cent in Europe in the first quarter.
The restructuring plan includes the closure of Peugeot-Citroen's Aulnay-sous-Bois factory, one of the biggest car plants in France and seen as a bastion of car-making and of autoworkers' unions.
The company will also cut 1,400 jobs at its Rennes factory and 3,600 jobs in other French sites.
CEO Philippe Varin, grim-faced, told reporters that the company is losing about €100 million per month. "No one will be left along the side of the road," he pledged:
The company is hoping a new alliance with General Motors Corp. will allow it to return to long-term profitability.
"It's no longer possible to continue to lose jobs like this. We have to come together to make the management back down," said CGT union member Jean-Pierre Mercier, who was present at Thursday's works council meeting.