PARIS – PSA Peugeot Citroen says it will keep selling its Peugeot 206 model in Europe alongside the larger Peugeot 207 at least into 2008.

“The 207 does not replace the 206,” says Christian Peugeot, a member of the controlling family of PSA and head of communications for the Peugeot brand.

Peugeot says the 206 will be kept in production this year in three European factories – Ryton, U.K.; and Poissy and Mulhouse, France, – as well as five overseas plants.

Both the 207 and 206 are built at Poissy; Ryton has only the 206, and the 206CC is built at Mulhouse.

This year the 206 begins production in China, and Iran, and the business plan calls for worldwide sales this year of 400,000 units of the 206.

The 207, which goes on sale in France in April and the rest of Europe by the end of May, is expected to hit 500,000 units in 2007.

Oliver Thrierr, project chief for the 207 and all small Peugeots, says the 206 will continue to be sold in Europe after next year.

Thus, the 207 will join the 107, the 1007 and the 206 in the A and B segments, known as “mini” and “supermini.”

The 207 is expected to be the bread-and-butter car for the brand, as was the 206 (5.5 million sold to date) and the 205 (5.3 million sold). The 206 was the best-selling car in Europe for several years, and Peugeot hopes for a repeat with the 207. The car is priced from €10,000 to €20,000 ($12,100-$24,200) in France.

The 107 is a small city car, a triplet with the Toyota Aygo and Citroen C1, with expected volume of 100,000 annually. The 1007, a small minivan, had aimed for 83,000 units a year but last year touched only 57,000.

“The 1007 is beginning to find its place in the market,” Christian Peugeot says. “It is taking more time than we thought to win a reputation.” This year’s goal is 75,000.

The 206 will be kept on as a value proposition in Europe with a limited number of variants, sized and priced between the 107 and the 207.

“Our role is to have all prices,” Saint-Geours says.

In Iran, the 206 will be built as a 4-door sedan. In China, it will be the same 5-door hatchback body as in Europe. Common wisdom has held that Chinese consumers want only the latest technology, but Peugeot General Manager Frederic Saint-Geours says the company chose to make the 206 because “the Chinese need a relatively compact car. It is the size that they want.”

The 207 required an investment of €1 billion ($1.2 billion), which includes outfitting three plants for production: Poissy, France; Trnava, Slovakia; and Madrid, Spain. Production already has started at Poissy. It is launching now in Madrid and will get under way in June in Trnava.

The car will be offered with three gasoline engines from 75 hp to 110 hp and three diesels with the same horsepower range. Initially Peugeot expects 48% of sales to be diesel.

This fall, a 1.6L, 150-hp direct injection turbocharged engine developed with BMW AG will be available, as well as a naturally aspirated version at 115 hp. The powerful engine develops 177 lb.-ft (240 Nm) of torque at 1,500 rpm, Thrierr says, giving it a diesel-like comportment.

The 207 uses PSA’s Platform 1 shared with the 206, 1007 and Citroen C2 and C3, but its wheelbase has been stretched by 3.1 ins. (8 cm). The car is 7.8 ins. (20 cm) longer than the 206 and weighs 331 lbs. (150 kg) more.

Thrierr says 132 lbs. (60 kg) of the additional weight come from safety items, 88 lbs. (40 kg) from the larger size and the rest from comfort features.

The car was awarded five stars in EuroNCAP crash testing, and Thrierr says it is safer than its French rival, the Renault Clio III. The 207 won three stars for pedestrian safety, while the Renault, introduced before pedestrian safety rules were toughened, was awarded only one.

The 207 has two bumpers in front, one high and one low, to spread the impact against a pedestrian’s leg, and space between the hood and motor cushions the landing of a body or head. Half the extra length is devoted to safety elements and reparability issues, says a spokesman.

Robert Peugeot, director-design and innovation, defends the evolutionary styling of the 207.

“Evolution fits the sensibility of the clients,” he says. “You can’t sweep away the effect of 5 million cars (the 206) sold.”

And Saint-Geours notes, “There are cases where a marque has changed its design and failed.”

He says the 3- and 5-door 207 will be joined by a coupe-cabriolet version later, as well as a fourth body design.