Peugeot Citroen, the second-largest car company in Europe (Volkswagen are the biggest), reported a decline in consolidated operating margins. The fall, from 3.4 per cent in 2005 to 2 per cent in 2006, was lower than analyst predictions.

Operating margins are becoming increasingly tight for the motor vehicle industry, and despite performing above analyst predictions, Peugeot Citroen are no different. 22 analysts predicted that the margin would slip to 1.7 per cent.

One analyst, Adam Jonas at Morgan Stanley, reportedly said: It is the first time they beat consensus numbers in I think a couple of years and it may be a big enough beat to drive a modest consensus upgrade for the first time in years. It's too soon to tell but based on these numbers by themselves without any further detail from the company it may suggest that Peugeot has reached a bottom.

The company remained upbeat, with new car models expected to fuel a return of sales growth. They released a statement that included: In 2007, the European market looks set to remain stable and the environment will continue to be shaped by rampant competition .