Peugeot, which last week announced a 10 percent European production increase to meet rebounding car demand, also raised its full-year market growth forecast to 4 percent from 1 percent.
"We are ahead of our roadmap and we are still accelerating, Chief Financial Officer Jean-Baptiste de Chatillon told analysts and reporters on a conference call.
The carmaker nonetheless reiterated key turnaround goals seen by many analysts as modest - including a 2 percent operating margin for the core manufacturing division in 2018.
"We think these are relatively unchallenging targets," Philip Watkins of Citi said in a note, describing the quarterly sales as a "broadly reassuring set of numbers".
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Peugeot may reach its mid-term profitability goal as soon as this year, the London-based analyst predicted.
After years of losses led to a 3 billion euro ($3.2 billion) bailout last year that saw the French government and China's Dongfeng buy 14 percent stakes, Peugeot hired former Renault second-in-command Carlos Tavares as CEO and pledged to reduce labour costs, inventory and model lineups, focusing on more profitable vehicles.
Peugeot's registrations were up 4.4 percent in Europe, but the group recorded a 0.9 percent drop in vehicle sales as the distribution network sold from stock. Global sales fell 1.9 percent to 712,200 vehicles.
Auto division revenues still edged higher to 8.95 billion euros, as pricing effort delivered a 1.7 percent boost to the top line. The gain was a healthier 3.3 percent including Chinese joint-venture sales that Peugeot does not consolidate.
Faurecia said sales rose almost 14 percent to 5.14 billion euros. Revenue also rose 1.4 percent at Banque PSA Finance - whose sales financing activities are being spun off into joint ventures with Spain's Banco Santander.