Peugeot Citroën, the French cars group, is planning to turn its back on western Europe and concentrate all its investment in new plant in eastern Europe

Peugeot Citroën, the French cars group, is planning to turn its back on western Europe and concentrate all its investment in new plant in eastern Europe and further afield because of lower production costs, said the chief executive, Jean-Martin Folz, yesterday at the Geneva motor show. Mr Folz was launching a range of cheap compact cars built with Toyota in Kolin, Czech Republic, where costs are 2.5 times lower than in France. He said the aim was to sell 300,000 annually, with the new Czech-built Peugeot 107 going on sale at prices starting at around €8,500 (£5,837) in June. BMW, however, bucked the gloomy trend among most car groups by announcing at the show yesterday it would build two new models in the next few years, including one in Germany. It said it expected to see up to 9% growth in its global sales this year on top of last year's record 1.2m. Manufacturers said a combination of falling demand, especially in Europe, where car sales are expected to fall below 14.5m, the weakening dollar and rising raw material costs could cut earnings this year and force a new round of savings. General Motors, which hopes to be rescued by sales of its Cadillac and Chevrolet models in Europe, and Ford are pointing to extremely tough market conditions, with the chairman of Ford Europe, Lewis Booth, saying that so far this year his firm's market share had fallen.