The new Citroen, likely to be a compact SUV, will be launched in 2018 alongside a larger Peugeot model following an upgrade to the factory due to begin next year.

The commitment to Rennes, often seen as vulnerable to closure because of the plant's relative isolation from other PSA sites, follows agreement on a new contract with unions, the company said. The deal includes wage restraint and increased flexibility on working time, according to local press reports.

(Reporting by Laurence Frost. Editing by Jane Merriman)