PSA Peugeot Citroen posted a 3.2 percent increase in third-quarter revenue on Monday as recovering European demand shielded the carmaker from the worst of a slowdown in China sales.

Revenue rose to 12.4 billion euros ($13.7 bln) in the three months ended Sept. 30, Paris-based Peugeot said in a statement, defying a slide in sales volumes, down 4.3 percent globally and 17 percent in Asia.

"The important thing is that our solid growth is driven by key elements of our sales and product strategy," Chief Financial Officer Jean-Baptiste de Chatillon told reporters, citing a net price increase of 1.2 percent in the quarter.

Revenue at Peugeot's core automotive division rose 1 percent to 8.05 billion euros.

Under an ambitious turnaround plan, Chief Executive Carlos Tavares is seeking to reduce Peugeot's reliance on Europe for more than 60 percent of its car sales. But that dependence served the company well in the last quarter, with sales in its home region up 6.1 percent.

Peugeot also raised its full-year European market growth forecast to 8 percent from 6 percent.

Like many of its mass-market peers, Peugeot is also struggling with collapsing demand in South America and Russia, where sales volumes tumbled 23 percent and 46 percent respectively.

The French carmaker's performance also reflected an 8.3 percent sales increase at 50.8 percent-owned parts maker Faurecia, which published quarterly numbers on Oct. 14.

In the wake of the Volkswagen emissions scandal, Peugeot faces a challenge in adapting to a shift in demand from diesel to petrol engines, particularly in France, where policymakers are increasingly hostile to diesel, Chatillon said.

Diesel vehicles, which command higher prices, fell to 65 percent of Peugeot's European sales in the quarter, from 67 percent a year earlier, even before the Sept. 18 revelations of VW diesel test-rigging had time to affect demand.

The costs of cutting diesel production and ramping up petrol engine output could put a dent in profitability "that we'd have to compensate in terms of pricing", the CFO said, without giving detailed forecasts. "But we have the capacity."