PSA Peugeot Citroen said on Thursday it was investing €1.12 billion ($US1.35 billion) on its latest large saloon model, the Peugeot 407, which it plans to launch in the spring, a Reuters report said.

According to the report, PSA said it aimed to sell 300,000 of the new cars annually from 2005, its first full year of production, which would beat sales of the 406 predecessor which sold 260,000 in its best year.

Although the car was officially launched on Wednesday, 'scoop' pictures of the new 407 had already been published in car magazines and on the internet. Some were taken when a member of the public came across an advertising shoot in South Africa and others, apparently 'official' press launch pictures, were said to have been obtained from Peugeot's headquarters ahead of schedule.

"We will spend 1.12 billion euros on the launch of the 407, which will go on sale in the second quarter of next year," a PSA spokesman told Reuters.

The report said Peugeot, which has seen its market share slip this year due to a lack of new models, said it expected to make 30% of its 407 sales in France, 50% in the rest of Europe and 20% further afield.

The company expects total investment to tally around €3 billion this year, just above last year's level, and says it will comfortably pay for this from cashflow, Reuters said.

According to the report, the new car will be assembled at PSA's factory in Rennes, western France, which also makes the Citroen C5, making the facility the first to produce Peugeot and Citroen models on the same assembly platform, a key part of the company's industrial strategy.

PSA reportedly said it would spend €380 million of its total investment in the model on modernising Rennes to make this possible.

Reuters said that PSA, which unveiled the 407 on Wednesday, plans to bring out an estate car version three months after the saloon, followed by a coupe version at an unspecified date.

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