PSA Peugeot Citroën plans to start building two new models by 2007 at the group’s Buenos Aires plant, where the Peugeot 206, 307 and Partner and the Citroën Berlingo are currently manufactured.

PSA has not named the new cars but supplier sources told they are Citroen’s C4, which makes its public debut this week at the Paris motor show as the replacement for the long-running Xzara line, and a sedan version of Peugeot’s 307 line, which will also soon be built in China.

At the same time, PSA said in a statement, output will be considerably increased at the Jeppener facility, which makes engines and other mechanical components.

“These developments are supported by the favourable outlook for the Argentine automobile market,” the company said. “They will leverage both facilities’ heightened competitiveness, reflecting the country’s improved economic situation, the restructuring programmes carried out on both sites in recent years, and [the] increase in local content.”

The new models will be exported to other Mercosur countries, as well as to other Latin American markets and possibly further afield, the statement added.

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PSA said annual output at the Buenos Aires facility is expected to increase from the 45,000 cars planned in 2004 to 100,000 in 2007. The addition of a new shift will increase capacity utilisation to nearly 100%. Component production at the Jeppener site should triple over the same period.

In all, the plan is expected create more than 1,000 jobs at the two facilities, in addition to the 300 people already hired in 2004.

Total investment is expected to amount to 450 million Argentine pesos (€125 million). One-third of this will be devoted to local content, which will result in more business for the group’s Argentine suppliers.

PSA said the is in line with its strategy in the Mercosur countries, which focuses on balanced, parallel development of automobile production in Argentina and Brazil.