Peugeot executives yesterday issued an urgent appeal to union leaders not to jeopardise future investment at the French car group's Ryton plant near Coventry by ordering a strike later this week.

The unions meet on Friday to discuss their strategy after securing a majority vote to reject Peugeot's final offer of a two-year pay deal worth 7.3% extra and to authorise a strike by the 3,900 production workers.

Ryton, which produces the best-selling 206 car, already faces serious long-term problems because of the strong pound and the government's failure so far to come up with an attractive aid package to help fund a £250m investment programme. This is required to build any new car at the West Midlands plant which is currently overcrowded.

Jean-Martin Folz, chief executive of PSA Peugeot Citroën, said the "third and final" pay offer was the best available in the British car industry -and only 40% of the eligible workforce had backed a strike in the recent ballot.

"We clearly do not understand why the unions have taken such a position... Industrial action contributes to the general image of the plant but we assume that we have responsible unions," he said. Privately, he and other executives are warning the unions that a strike would deal a serious blow to Ryton's future.

Outlining Peugeot's strategy of selling four million cars by 2006, when the group expects to make annual savings of more than €1bn (£660m) through streamlining production, Mr Folz failed to give long-term assurances about Ryton.

Speaking at a modernised plant north of Paris, Mr Folz said Britain's decision to stay out of the euro zone was the most negative factor creating uncertainty about future investments at Ryton. The strong pound means Ryton's costs are 35% higher.