Gronholm: The car slid on the sump guard.

Peugeot team leader, Marcus Gronholm has retired from the Telstra Rally Australia in the first test of the day, SS10, after going off the road.

The Finn, who had led the event from the outset, had built up a 21.4 second lead over Sebastien Loeb, who now leads the second Peugeot 307 WRC of Harri Rovanpera, by nearly one minute.

"Everything was going OK until a left-hand corner about three kilometres into SS10, the first stage this morning," explained Marcus.

"We came into it with normal speed, but the ruts were much deeper than they had been yesterday, and the car started to slide on the sump guard.

"This put us into a 360-degree spin and we hit the front and the back of the car against a tree. I tried to start the engine, but after the impact there was something rubbing against the alternator belt, so the engine would not restart. Finally we managed to get it going again, but it was too late.

"It was a real pity as the speed and the reliability of the car has been perfect. We just needed a bit more ride height to get through that corner."