Workers at the Ryton Peugeot-Citroen plant should know by the end of this year which car will replace the Peugeot 206 in 2008.

Tod Evans, chairman of PSA Peugeot-Citroen in the UK, has not ruled out building both Peugeots and Citroens at the Coventry factory in the long term.

Evans said that the French car giant will “keep its powder dry and wait until the last minute” before deciding which of its small cars will continue to carry the “made in Britain” tag.

Dipping European demand has forced PSA to cut back from four to three shifts at Ryton, which had been one of the few plants in the world to operate on that basis.

Production will come down from the maximum annual volume of 200,000 cars to between 170,000 and 180,000 units.

Reacting to the possibility of producing both brands on the same UK line Evans said: “It is absolutely clear group policy to develop shared platforms and apply that industrially to build both cars in the same factories. The 206 did not have a Citroen equivalent but next time round that capability will exist.

“We have the capability of building both at Ryton particularly as the B segment market continues to grow. Obviously market demand will dictate what we do in the future.”

Professor Garel Rhys, automotive industry director at Cardiff Business School, said: “There is no direct PSA threat to Ryton and I think it has a role for 10 years at least.”