French auto giant PS Peugeot Citroen must restructure "urgently" to get on top of its problems, a report commissioned by the government warned Tuesday, urging a tie-up with a global group.

A restructuring of the group was inevitable and the firm had to "act urgently to get on top of the situation," the report said, reproaching the company for missing the bus of globalisation.

The report by government expert Emmanuel Sartorius, said: "The need, in principle, for a plan to reorganise industrial activities and reduce the workforce cannot be challenged unfortunately."

It said that "in the medium and long term, the future of PSA lies in a strategy of an alliance with a big world automaker."

The report was commissioned by the new Socialist administration against the background of a plan by the group, the second-biggest automaker in Europe after the VW group, to shed 8,000 jobs in France.

The company was known to be experiencing pressing financial strains, but the announcement of the cutbacks soon after the new government was elected came as a shock and caused considerable uproar in France.

The government has signalled strongly that it wanted the restructuring measures to be diluted, in a context where a decline of manufacturing activity in France, and investment abroad, is a hot subject and a policy priority.

The report, revealed to trades unions on Tuesday, severely criticised management and shareholders for their strategy in the past, but appeared to support the company's general line that there is no alternative to retrenchment.

PSA Peugeot Citroen has recently entered a limited alliance with General Motors of the United States.