10:00AM New York—PSA Peugeot Citroen first half sales rose 4.6% to 1,845,00 units; the company provided bleak outlook.

Strong Overseas Demand Drives Sales

PSA Peugeot Citroen, the French carmaker, said sales rose 4.6% to 1.845 million in the six months to June 30th from 1.764 million a year earlier on strong demand in Eastern Europe and Latin America.

Europe''s second biggest carmaker after Volkswagen said it maintained its global sales growth objective of 5% for 2008 as a whole, as demand for new models rose in Russia, Brazil and Argentina.

Peugeot Citroen produced 1, 080,000 Peugeot type vehicles and 765,000 Citroen vehicles in the half year. Assembled vehicles rose 0.5% to 1, 679, 000 units sold.

For the half-year, Peugeot said sales rose faster in Russia up 61.5%, 38% in Brazil and 12.6% in Argentina.

While growth has been faster in emerging markets, sales have started from a low base with 25,200 cars sold in Russia and 75,900 in Brazil. At least 104, 600 vehicles were sold in China, up 3% on 2007.

Sales dropped 3.5% in Western Europe to 1.230 million units split between 659,000 Peugeot and 572,000 Citroën. Sales from outside Western Europe rose 20% to 635,000. But in the key domestic market, sales gained 5.3% to 439,000.

Overall sales in several major European markets fell despite strong sales of its Peugeot Citroen’s newest models, the Peugeot 308 and well-received new versions of the Citroen C5.

Sales in the U.K declined 8% to 140,000 on currency changes, as the pound weakened against the euro.

In Spain, Peugeot Citroen sold 161, 000 cars, down 19% on prior while sales fell 11% in Italy to 141,000 units. The company sold 101,000 cars in Germany, up 7.4%.

Carmakers are slowing production on weakening demand. Competitor, Volkswagen AG delivered 1.57 million vehicles worldwide during the first three months of this year.

Toyota, the Japanese carmaker is planning to cut U.S sales forecast while Ford reported a 14% decline in vehicle sales during the first six months of this year.

In the same period, sales fell 16% at General Motors and are down more than 20% at Chrysler LCC, maker of the Mercedes Benz.

Fiat, the Italian car producer, said domestic sales dropped 20% in June, and the firm is planning to shut down four plants for up to a month.

New Models Sell Faster

The company said it sold 150, 000 Peugeot 308 cars in the period to June, a just a few months after it was brought into the market.

Peugeot said the Citroen C5 sold 30,000 units in the half year while the Peugeot 207 sold 276,000 units.

More than 36,000 Citroen Berlingo and Peugeot Partner vehicles were sold in the half-year. The company said it sold nearly 520,000 low consumption and low carbon dioxide emitting cars during the review period.

Earnings Guidance and Share Price Review

Peugeot Citroen expects continued double-digit growth in over-seas markets, where it is setting up new offices.

It expects that “Western European markets will undergo an even greater slowdown leading to a decrease in these markets of around 4% over the whole of 2008.”