Europe's second-biggest carmaker caused alarm in the market yesterday when it said that European sales in general would fall by 4 per cent this year.

Some analysts thought that the warning from Peugeot Citroën was too conservative and that the decline could be worse.

The French group's fears of a drop in the market for all manufacturers contrasts with its sales for the first half of 2008, which were up 4.6 per cent at 1.8 million units.

Peugeot, which is second only to Volkswagen in Europe, has been buoyed by the launch of the 308 model. It hoped to achieve its annual target for the model.

Nevertheless, the carmaker's warning over the future of the market sent its shares down by 45 cents to €31.50, their lowest for nine years.

Peugeot's prediction is in line with the views of JD Power, the consultancy, which last week also predicted a 4 per cent drop.

However, Landesbanki Kepler, the brokerage, said: “We fail to be as confident as the group.”

It said that, while the French market eases, rising commodity prices could force carmakers to raise selling prices, which would depress sales more.

Peugeot is in the middle of a long-term restructuring plan after the appointment of Christian Streiff as chief executive last year. It has cut some capacity in Europe and is putting more resources into growing markets, such as China and Russia.

The French carmaker's warning came a day after BMW, of Germany, the biggest premium manufacturer, said that its global sales for last month had fallen 2.8 per cent amid a difficult market, especially in the United States.

Renault, Peugeot's French rival, will announce its half-year sales today. Its share price fell €1.01 to €49.82 yesterday after the gloomy forecast for the market.

In Italy, Fiat said yesterday that it was planning a series of temporary lay-offs in response to a very weak domestic market. Last month, new car sales fell 19.5 per cent to 184,275.

BMW and Fiat said yesterday that they would look at using shared components for the Mini marque and Alfa Romeo to cut costs and boost economies of scale.

The joint operation is part of a growing trend among carmakers to forge alliances in an attempt to cut costs. Many big companies co-operate, particularly on engine development, which is expensive and lengthy.

General Motors (GM) said yesterday that it was developing plans to cut costs and improve what it called its cash and funding position.

Rick Wagoner, chief executive of the world's biggest carmaker, told company managers: “The rapid rise in fuel prices and change in auto industry sales mix have made market and economic conditions very challenging. We are responding quickly and aggressively with a steady stream of actions to better position GM for sustainable profitability and growth.”

Merrill Lynch said last week that GM could face bankruptcy if it did not raise more capital and if the car sales market continued to worsen. It estimated that GM needed $15 billion (£7.6 billion), although the company has said that it has enough liquidity for this year as long as conditions do not worsen.

Audi, VW's luxury division, managed to buck the downward trend in the global car market with an increase in vehicle sales for June. Boosted by its revamped A4, it recorded a 1.3 per cent increase in sales to 90,000 vehicles last month, with first-half sales rising 1.4 per cent to more than 516,000 vehicles.

Audi predicted that it would have a stronger second half of the year and that it was on the road to breaking the million vehicle sales mark for the first time.

Audi's fortunes will be helped by the introduction of a range of new vehicles. It will revamp the A3 this month and introduce the new A4 to the American market in September.

Its mid-size sports utility vehicle - the Q5 - is due to go on sale in Europe before Christmas.

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