PARIS -- PSA/Peugeot-Citroen said first-quarter revenue fell 7.3 percent as the region's vehicle market contracted.
Quarterly revenue fell to 14.29 billion euros ($18.9 billion), with automotive division sales down 14 percent to 9.72 billion, PSA said today.
"The competitive environment remained difficult during the quarter, with pricing pressure similar to the last quarter of 2011, and markets in southern Europe worsened considerably, with an unfavorable impact on the group's country mix," the carmaker said. "This environment should last throughout the first half of the year."
PSA set up a vehicle-development alliance in February with General Motors Co. in an effort to address overcapacity and shrinking profitability.
"The results are bad, but they are not worse than expected, so that's a relief," said Kristina Church, an analyst at Barclays Bank Plc in London. "The market had been assuming that the pricing would be worse. Management said that they were more confident for the rest of the year, and they sounded on top of the crisis."
PSA said it has achieved about half of a 1.5 billion-euro asset-sale plan while making progress on a spending- reduction program of 1 billion euros, and net debt will probably decline "significantly."
Industrywide first-quarter car sales in Europe dropped 7.3 percent to 3.43 million vehicles, according to the region's automakers association ACEA. PSA was the third-worst performer among the region's major carmakers, with sales falling 17 percent to 407,792 cars. That contrasted with Volkswagen Group, Europe's largest auto manufacturer, which posted a sales increase of 0.5 percent to 813,522 vehicles.
All major carmakers except Volkswagen lost money in Europe last year.