PARIS - Peugeot Citroen is forecasting a 10 per cent drop in car sales in its core French market this year amid tough economic conditions.

The downbeat forecast came as the maker of the popular Peugeot 207 hatchback and Citroen C4 Picasso minivan reported that its automotive division made a €439 million ($578 million) loss at the operating level last year, as restructuring costs more than offset slightly higher revenue.

After including the group's car parts, financing and logistics divisions Peugeot Citroen group profit fell by almost half to €588 million.

The car maker gave no forecast for its 2012 earnings, but said Wednesday it expects market conditions "to remain difficult in Europe," where the group makes over half of its total vehicle sales.