COVENTRY, UK - Peugeot will build the replacement for the 205 in its UK plant alongside the 106.
The 205 replacement, code-named T1, will debut at the Birmingham auto show in October 1998 and go on sale in Europe a month later.
Peugeot believes the cars do not compete with each other.
'I think it will be more of a challenge than a problem when we roll out our new model alongside the 106,' said Richard Parham, managing director of the UK subsidiary. 'We want growth and this is the way to get it.'
Parham said the T1 'will build on the heritage of the 205.'
He said offering a variety of small cars in the showrooms seems to be a new standard.
'Ford seems to manage quite well with Ka and Fiesta, and Volkswagen seems to be moving in the same direction,' said Parham. 'The supermini segment is gearing up for more growth as more people accept that the time is coming for a different approach to transport.
'A lot of downsizing is going on, but the latest small cars are bigger inside than many people expect.'
The 106 competes in the mini segment, and the 205 and T1 in the supermini segment.
The first T1 cars left the pilot assembly facility at Mulhouse, France, at the end October. Workers from Peugeot's factory at Ryton, UK, are training there. Earlier, 20 UK-based engineers moved to Mulhouse to develop the right-hand drive versions.
'This is the first phase of a comprehensive training program,' said Parham. 'We will have 70 people involved in the pilot build. They will train at Mulhouse before coming back to England to train other workers during the first six months of next year.'
Peugeot is spending £100 million ($160 million) to upgrade the plant.