PSA Peugeot Citroen has warned governments that halting scrappage schemes could prove disastrous.
The group warned that it could lose two billion Euros (£1.7bn) this year, and have to scale back production in the fourth quarter of this year, if Europe-wide scrappage schemes start to be curtailed.
France was the first of the 12 European countries to launch a scrapping scheme as part of a six billion Euro (£5.1bn) car industry bailout, and will decide in January whether to continue. Many expect the government to reduce the 1000 Euro (£851) trade-in incentive in stages.
The German government, which has the most generous scheme, says it is 'weighing its options'.
Peugeot issued the warning at the same time as announcing a convertible bond issue of up to 575 million Euros (£489m).
PSA Peugeot Citroen recorded a 343 million Euro (£292m) net loss in 2008, said the capital raised from the bond issue would go towards “general financing needs”, development projects and the extension of the maturity of its existing debt.