PSA Peugeot Citroen has announced plans to build a new European assembly plant in Poland, Slovakia, Hungary, or the Czech Republic. The company is setting aside around £440 million for the investment, which will add production capacity for a further 300,000 vehicles a year.

The move dovetails with a substantial hike in car sales in Eastern Europe. The carmaker's market share in the former Soviet Bloc countries has risen from 5 to 12 per cent over the past five years.

But industry sources are already pointing to this development as signalling the possible death-knell for the overcrowded Ryton Plant. While Peugeot is pressing the Government for state aid to expand the Coventry factory - it says it needs to spend £250m on it to fund vehicle production expansion plans - Whitehall has already warned that the project will be eligible for limited aid under EU rules.