Peugeot‘s UK boss Pierre Louis Colin is warning the current exchange rate difficulties the Pound is facing versus the Euro is “the most important issue” currently facing the industry.

“Most of the market is fed from European production,” he said, “and obviously when the Pound is suffering, as has been the case for four or five months, the pressure on manufacturer margins is significant for a number of brands.”

Colin (above) said Peugeot is cutting its daily rental volumes from 21,000 last year to 13,000 in 2008.

“We have taken a decision regarding the most expensive sales channels,” he said. “Some channels are not worth maintaining the volumes to because the economic impact is too excessive.”

The cut in volumes accounts for Peugeot’s sales performance in the first four months of the year. The French brand is 5.2% down on January-April 2007, with the upper medium 407 55.4% down.

“We’ve done no 407s to daily rental this year and lots of competitors have launched new cars,” said Colin. “We’ve lost little in RVs compared to the competition and it’s more difficult to be competitive on contract hire.”

Peugeot has still to appoint a new fleet boss following David Peel’s departure to the brand’s own dealer group Robins & Day in early March, just a month after he’d taken the job. Peel replaced former fleet boss Steve Harris, who took the job of fleet operations manager at Robins & Day early this year.

The Peugeot UK boss said he’s “very happy” with the introduction of the firm’s second-biggest selling model, the 308, which was launched last year. “The 308 has had a smoother start than we were thinking,” said Colin, who is looking to the new SW, or estate, variant to “give us the opportunity to again talk to the industry about 308.”

As well as the new SW estate version that comes with a seven-seat option, the firm is filling out the range with a new semi-automatic gearbox on the 110PS?1.6-litre diesel called EGC.

It cuts CO2 from 125g/km to 120, dropping the car into the 13% BIK banding. The firm is also launching a 175PS 1.6-litre petrol version, badged 308 GT.