The Paris-based automaker said sales in the three months through September fell to euro13.3 billion ($17.04 billion) from euro14.02 billion. Anticipating a 17 percent drop in the European market in the fourth quarter, Peugeot-Citroen said it now expects its global sales volumes to fall 3.5 percent from 2007. Previously it had been expecting volumes to grow 5 percent this year. Europe's second-largest car manufacturer by sales reduced its target for operating margin -- a measure of earnings from ongoing operations -- to 1.3 percent for 2008 from 3.5 percent. 'We have reacted very swiftly to this market collapse with exceptional measures to cut production, even though this is obviously detrimental to our 2008 operating margin,' Streiff said in a statement. 'Massive production cuts will be made in the fourth quarter as it is vital that we are correctly positioned to face 2009.' Shares in cross-town rival Renault SA dropped 10.5 percent to euro22.71 ($29.09). The automaker cut its full-year profit targets after market close on Thursday and said third-quarter sales had fallen 2.2 percent. Also on Thursday Germany's Daimler AG reported a fall in North American sales and abandoned its 2008 earnings forecast and Italy's Fiat Group SpA warned sales could drop 20 percent next year. In the third quarter, Peugeot-Citroen said that registrations in France, which had received a boost from government incentives to buy more environmentally friendly vehicles, were flat. Germany turned negative, and the decline in Spanish and UK markets accelerated. In Russia, the rate of growth in new registrations slowed to 12 percent in the quarter. The pace of growth also diminished in the Brazilian and Argentine markets. Registrations fell 6 percent in China.