French cars group Peugeot Citroën today said it would impose immediate and "massive" production cuts after issuing a dire sales and profits warning.
Europe's second-largest automotive group shredded its ambitious targets after posting a 5.2% drop in sales to €13.3bn (£10.62bn) in the third quarter, with cars turnover down 7.1% to €10bn.
Peugeot warned that western European car markets would plunge 17% in the current quarter as consumers tighten their belts in the recession and credit is frozen.
It is the latest of the big mainland car-makers to underline the severe impact of financial turmoil on the "real" economy after Daimler, Renault and Fiat yesterday. The Italian group said it expected its sales to slump 20% in 2009.
It was joined today by Swedish truck-and-bus-maker Volvo which reported a 37% plunge in net earnings and pointed to slumping sales in Europe, the US and Japan.
Peugeot said it now expected European car sales to be down 8% this year as a whole, with its own global sales down 3.5% on 2007 as the crisis hits emerging markets as well.
The group said it would concentrate all its output cuts for 2008 in the current quarter, implying huge lay-offs in the run-up to the new year.
Its profit margin, originally targeted at 3.5% for this year, would now be just 1.3%, sending the group back to its abject performance of a few years ago before it started slashing costs.
Christian Streiff, chief executive, said the group was holding on to its capital reserves and concentrating on cash management.
"We have reacted very swiftly to this market collapse with exceptional measures to cut production even though this is obviously detrimental to our 2008 operating margin."
Peugeot shares slumped 12.4% in early trading, with Renault down 10.5%.
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