TPCA, a Czech-based joint venture of French car maker PSA Peugeot Citroen and Japan's Toyota, will cut production from May because of falling demand for its cars, the company says.
"We have to react flexibly and adjust production to demand for small cars in European markets," company president Satoshi Tachihara said in a statement.
TPCA "will cut the working week to four days during which production will be ensured by two teams instead of the current three," said the company which has 3,500 staff based in Kolin, about 60 kilometres east of Prague.
"TPCA expects to produce 221,000 cars this year," down from more than 270,000 in 2011, it added.
The company makes the small Peugeot 107, Citroen C1 and Toyota Aygo models.
PSA Peugeot Citroen - Europe's second largest automaker after Germany's Volkswagen - said on Wednesday it would boost its cost-cutting plans after its 2011 net profit tumbled by nearly half.
Along with Volkswagen's indigenous Czech unit Skoda Auto and South Korea's Hyundai, TPCA is one of three large Czech automakers whose combined output last year was up 11.44 per cent to a record-high 1,194,981.
The economy of the Czech Republic, a central European nation of 10.5 million people, is heavily dependent on the car industry, which accounted for 21 per cent of total industrial output and 22 per cent of all exports in 2010.
Fuelled by exports from the three car makers and local car parts producers, the Czech economy grew 1.7 per cent in 2011, following 2.7-per cent growth in 2010, official data showed.