PARIS--French carmaker PSA Peugeot Citroen (UG.FR) said Tuesday it will ramp up production this year to capitalize on growth in European markets.

The car maker will raise European production by more than 60,000 vehicles by the end of August, 2015. All the company's brands will be affected by the increased production.

"Growth in the European market is very good news for the entire automotive industry, from plants to dealership networks to suppliers. It's having a real turbo effect on PSA's performance," said Denis Martin, the company's operational director for Europe.

To meet the new production targets, the carmaker will change work schedules and in some cases hire temporary workers. Peugeot said agreements signed with employees--particularly in France in 2013--give the company the necessary flexibility to raise output.

PSA's shares were up 2% at EUR16.86 in early trading in Paris. Shares in domestic rival Renault SA (RNO.FR) also rose, up 2.5%, at EUR93.01.

-Write to William Horobin at william.horobin@wsj.com

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