Talks began on Thursday morning

The Transport & General Workers Union (TGWU) and Amicus have vowed to oppose compulsory redundancies at Ryton, near Coventry, which employs 2,800 workers.

Peugeot said rising competition in the small car sector and a dip in sales of its 206 model had led to the job cuts.

Peugeot's decision is the latest blow to Coventry's car industry; Jaguar shut production at Brown's Lane last year.

A spokesman for the TGWU said talks had started at 0800 GMT on Thursday and could continue all day.

Peugeot plans to reduce work at the plant from three shifts a day to two in the summer.

The company said it hoped to cut jobs through voluntary redundancies, early retirement and redeployment of staff at other Peugeot sites.

Peugeot pledged that Ryton would play "a key role in the company's manufacturing strategy as it will become the main European production site for the car for several years to come".