Peugeot is to close its car plant at Ryton near Coventry with the loss of 2,300 jobs, it has been announced.
The Ryton plant produces the Peugeot 206 model
The plant, where the Peugeot 206 is made, is to cease production in the middle of next year.
Union officials reacted with anger, calling the decision "another nail in the coffin" of the UK's car industry.
It is a second blow to the West Midlands car industry - nearly 6,000 jobs were lost last year at MG Rover in Longbridge, Birmingham.
The 206 model will continue to be produced at a plant north of Paris.
Jean Martin Folz, chief executive of Peugeot Citroen, said on Tuesday a study showed Ryton had high production and logistical costs.
This meant the group was unable to justify the investment needed for the production of future vehicles.
That combined with reduced demand and intense competition in Europe meant the company had come to come to this "difficult conclusion", he said.
The Ryton plant currently operates on a two-shift system.
Production will be stopped in two phases by moving to a single shift in July 2006, and then halting production completely in mid-2007.
Union officials said the news was disastrous for British manufacturing.
'Slap in face'
Derek Simpson, general secretary of Amicus, said: "It is inconceivable that workers in France would be laid off on this scale.
"Weak UK labour laws are allowing British workers to be sacrificed at the expense of a flexible labour market."
The Transport and General Workers' Union called the news "the worst unkept secret in the car industry".
Jim Cunningham, MP for Coventry South, said: "It's a pretty grim afternoon for the motor car industry and manufacturing in general terms.
"It's a bitter pill for the labour force to have to swallow after two years where they've been exhorted to increase their productivity.
"They've done that, they've improved quality, only to find out at the end of that they get a slap in the face."
The Coventry and Warwickshire Chamber of Commerce said it was a blow, but many Peugeot components were already made outside the UK.
"The one small grace in this is that the ripple effect on the whole economy will not be as severe as might be expected," spokesman Alan Durham said.
Trade and Industry Secretary Alan Johnson said the decision was a commercial matter for Peugeot, but he was disappointed, especially as the workforce had delivered quality and productivity improvements in recent years.
The DTI recently offered a £14.4m grant towards the cost of developing the plant so it could deal with more than one model, he added.
Coventry City Council said it and Warwickshire County Council had been working with the company to make the plant sustainable.
It said it was disappointing it had not been able to convince Peugeot it had a production future in the area.
In 2004, up to 1,000 jobs were lost in Coventry when Jaguar moved production to Birmingham.