PSA has started Argentine production of the one-litre, 16-valve Peugeot 206 at its Palomar plant in Buenos Aires, to help meet expected strong demand in Brazil.

Argentine production of the one-litre version is exclusively for Brazil where Peugeot do Brasil expects to sell about 17,000 units this year but can build only about 13,000 at its new plant in Porto Real, Rio de Janeiro state.

Aregentina's Palomar plant has made the 1.6-litre 206 since 1999.

It is sourcing the one-litre engines for the Brazilian export cars from Renault's engine plant in São José dos Pinhais, Paraná state, in Brazil.

Peugeot do Brasil will launch the one-litre 206 at the end of June.

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