'We have to react flexibly and adjust production to demand for small cars in European markets,' said company president, Satoshi Tachihara in a recent statement.

TPCA will cut the working week to four days during which production will be ensured by two teams instead of the current three, which currently employs 3,500 staff at the companys plant in Kolin, approximately 60km east of Prague.

'TPCA expects to produce 221,000 cars this year,' down from more than 270,000 in 2011, the company added.

TCPA, which makes the small Peugeot 107, Citroen C1 and Toyota Aygo models, 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% to a record-high 1,194,981.

The economy of the Czech Republic, a central European nation of 10.5m people, is heavily dependent on the car industry, which accounted for 21% of total industrial output and 22% of all exports in 2010.

Fuelled by exports from the three car makers and local car parts producers, the Czech economy grew 1.7% in 2011, following 2.7% growth in 2010, official data showed.