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Peugeot Forecasts 4% Fall in Vehicle Sales for 2008

PSA Peugeot Citroen, Europe's second biggest carmaker, said on Tuesday it expected a slowdown in west European auto markets to worsen and forecast a four percent decline in vehicle sales for the whole of 2008.

The outlook is in line with consultants J.D. Power Automotive Forecasting which said on Friday it expected vehicle sales to fall four percent in 2008 and 1.3 percent in 2009, from a previous outlook of a decline of 2.1 percent for 2008.

It blamed a 'toxic' mix of falling asset prices, slowing economic growth, financial crisis and rising inflation.

Peugeot Citroen, second to Volkswagen in passenger car sales, did not give reasons for its outlook but called the economic environment 'tough'.

It shares closed 1.4 percent lower on Tuesday.

But in its priority growth markets, the Mercosur area in south America, China, Russia and Eastern Europe, it expected a double-digit growth rate for the full year, the company, Europe's biggest maker of light commercial vehicles, said.

PSA maintained its target of global consolidated sales growth of around 5 percent in 2008.

This compares to a 4.6 percent growth in vehicle and completely knocked down (CKD) units to 1.84 million for the first half while assembled vehicle sales were up 0.5 percent to 1.7 million units.

It said its first-half sales were underpinned by its Peugeot 308 and Citroen C5 models as well as sound sales of the Peugeot 207.

But some analysts doubt whether the group can reach its 2008 operating margin target of 3.5 percent.

The average expectation of analysts is 3.38 percent, according to Reuters Estimates.

The company will detail its first-half earnings on July 23.

Low Consumption

PSA also said it would benefit from its leadership in low consumption and CO2 emission vehicles.

It would also see the full impact of new models such as the Peugeot 308 and 308 SW, the new Citroën C5 in its sedan and Tourer versions and the latest LCV range, with the Peugeot Bipper and Partner and Citroen Nemo and Berlingo.

PSA Peugeot Citroen registrations fell 3.5 percent to 1.23 million units in the first half, in a European passenger car and light commercial vehicle market that was down 3 percent.

Over the period, its market share was 14 percent compared with 14.1 percent a year ago and 13.8 percent for the whole of 2007.

Sales rose in France and Germany, but in Spain and Italy they dropped.

In Britain, where the weak pound is a worry, sales fell 7.9 percent.

But sales in Mercosur, Brazil and Argentina rose 26.5 percent, in China 2.9 percent and in Russia sales rose 61.5 percent.

Peugeot shares have dropped 38.4 percent so far this year and at 31.95 euros it is trading at 5.25 times expected 2008 earnings -- the lowest multiple of the European major markets.

Renault will publish its first half unit sales on Wednesday.