Page last updated at 16:53 GMT, Friday, 24 October 2008 17:53 UK

Peugeot to launch 'massive' cuts

New Peugeot cars
Peugeot is predicting a slowdown

French car company Peugeot Citroen has said it will cut its 2008 profitability outlook and start "massive" production cuts, in the wake of a global downturn.

The news came as figures showed third-quarter sales declined 5.2%, underlining slowing demand.

Separately, truck companies Scania and Volvo both saw orders in Western Europe slump for the quarter.

Germany's car giant Volkswagen said it would cut production a day after Renault said it would reduce output.

On Thursday Chrysler said it would cut 1,825 jobs in the US.

Correctly positioned

Peugeot chief executive Christian Streiff said the firm was reacting to the "collapse" in Europe's car market. By cutting production, it would avoid a surplus stock of cars building up.

Third-quarter sales dropped to 13.301bn euros (10.7bn; $17.09bn), missing forecasts.

Shares in the car firm tumbled 15.6% to a 12 month low at one point in Paris trade, before clawing back most of its losses to end down 27 cents at 17.6 euros.

"Massive production cuts will be made in the fourth quarter, as it is vital that we are correctly positioned to face 2009," said Mr Streiff, although exact details were not available.

Meanwhile, both Scania and Volvo saw earnings miss forecasts.

Volvo pre-tax earnings dropped to 2.9bn Swedish kronor from 4.57bn Swedish kronor a year earlier, while Scania saw pre-tax profit of 2.51bn Swedish kronor from 2.38bn Swedish kronor the year before.

Other automotive firms to be hit by the downturn include Germany's Daimler, which has seen North American sales fall, while Italy's Fiat said sales could drop 20% in 2009.

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