Hi, not sure if this will help much but this problem has been shown on
Watchdog in the UK

The info below is taken from their website.

Chris.

2nd September 2003
Peugeot

Watchdog discovered that certain models of Peugeot 307s have a potentially
serious fire risk, which some owners have been unaware of.

Several viewers have been driving their cars when they noticed smoke
billowing from the bonnet and in some cases, it actually catching fire. The
cause is that the ignition key becomes stiff and stays in the starter on
position. This can cause the starter motor to overheat.

A recall campaign was launched by Peugeot in 2002. However, not all owners
appear to have received the notification letter. For those that did, the
letter made no mention of the potential fire risk. In fact, in an internal
Peugeot document obtained by Watchdog, this recall was actually classed as a
"non-safety" recall.

Peugeot regrets the events that have occurred and fully understands the
concerns of customers. Peugeot confirms the existence of a recall campaign
concerning the malfunctioning of the steering lock ignition switch on some
307 models. Vehicles involved in this recall were manufactured between April
and September 2001.

In the instance when the part did malfunction, drivers were alerted by
warning signs such as the key not returning from the 'starter' position to
the 'drive' position, an abnormal noise or an unusual smell. Therefore, as
there were indicative signs of a problem occurring the failure was
progressive.

Should any viewer be concerned then they can contact the dedicated Peugeot
helpline on 0118 945 8484 or visit their nearest Peugeot dealer.

Neil,

So sorry to hear about your problems.  I hope that the following may
help.

I cannot assist directly as I have a 206 which didn't catch fire,
however, I have had vast experience with dealing with Peugeot UK, and
the way they 'hide' behind the dealers.  I would advise you to try the
following:

Let me explain first with an example:

A cambelt breaks under warranty, this failure causes damage to the top
end of the engine.  There is usually no doubt that this would be
covered under warranty - note also that the cost of this is fairly
low.

Ok, look at your problem, something fails (wiring for example), this
caused damage to the rest of the car (fire), probably now a write off
- but this time the cost is high.

SO these two examples are kind of the same, the only reason Peugeot
are not repairing is 'cos of the cost.

What you need to do is be sneeky, find someone with a Pug, anything
will do.  You need to contact Peugeot with the 'pretend' case of
cambelt failure and get in writing that the total cost of the repair
is covered, - record the conversation if necessary (but inform them
that you are doing so).

This letter/recording can then be used as evidence that in the case of
a part failing and causing damage the whole cost would be covered.

Then contact WatchDog (they would love this), contact Auto Express
also and go and see a solicitor who has experience of this type of
case.  It is worth spending £50 on a letter.

Martin

An interesting link here - this guy had his replaced after 4 weeks of
arguing

http://www.carsurvey.org/review_24687.html

Matt