The top Peruvian diplomat in London went on the warpath earlier this month after ads for the company's new Inca and Aztec brands implied that both cultures were Mexican.
A letter from Maria Landaveri, the embassy's charge d'affaires, demanded that the campaign be changed "so that the advertisements actually mention Peru, or do not mention Mexico at all".
Her defence of Peru's Inca heritage also went to the Foreign Office, the Department of Trade, the Department for Education and the Independent Television Commission.
Ms Landaveri, who is running the embassy until a new ambassador is appointed next month, has received dozens of calls from teachers, students and tourists confused by the campaign picturing two versions of the Peugeot 106 under the slogan "Mexican Faves".
Some people had bought package holidays to Mexico, home of the Aztecs, hoping to see Inca ruins such as the fortress city Machu Picchu as well. "They were really disappointed to learn that these civilisations were based in two different countries and that there are thousands of kilometres between Mexico and Peru," wrote Ms Landaveri.
Peruvian callers were annoyed that the Aztec car is the better model, said cultural attache Carmen Azurin. "The Incas were the more advanced civilisation."
Confusion over where the pre-Columbian nations were located has even forced Latin Style, an importer of Peruvian beer, to change the name of its brand from Inca Gold to the less catchy Peru Gold.
"Since Mexican beer already has a niche in the market over here, Inca Gold did not have much chance of being consumed as a novelty," said Ms Landaveri. "Your advertisement fuels this confusion."
Officials at both Peugeot and its ad agency, Euro RSCG, apologised but the car company refused to change the campaign, saying only that it would not extend it beyond the scheduled end on 31 July.
"We thought it was just a bit of fun," said Susanna Hailstone, a board account director at the agency. "It's all in the right part of the world."
Tod Evans, Peugeot's commercial director, said: "We wanted the summer campaign to have a South American flavour."
Mexico, as it happens, is in North America.Reuse content