Its facelifted version was initially launched in South America in September 2008,[13] and in China in November 2008,[14] in hatchback, sedan and station wagon[nb 2] body styles,[13] and marketed as the 207 Compact,[13] and as the 207 respectively.

Between the 106 and 306, Peugeot hoped that the 205 would not need to be replaced, and could be phased out slowly, while customers who would normally plump for the 205 would continue to have a choice with either a smaller or larger car.

With the 205 phased out, other superminis like the Ford Fiesta and Volkswagen Polo continued to sell well and increased in popularity, and without a direct competitor to these cars Peugeot was losing sales fast.

[24] The development costs a total of 6.3 billion francs, with intensive use of IT as it is their first car designed with a digital mock-up along with crash simulations.

[citation needed] In 2001, two more versions of the 206 were launched – the 206 CC (coupé convertible) with a folding steel roof and the 206 SW station wagon.

A 4-door notchback sedan version, developed by Iran Khodro, was unveiled in late 2005, and it is available in the Iranian, North African, Chinese, Russian, Romanian, Turkish and Bulgarian markets.

The Peugeot 206 was mainly manufactured in Peugeot's Poissy and Mulhouse factories in France until 18 December 2012, as well as in Ryton, United Kingdom, whereas outside Europe it was produced in Iran (Iran Khodro), Chile (for the Mexican and Colombian markets, French-made 206s were cheaper than Chilean-built ones, in Chile), Argentina (PSA), Brazil (PSA), Uruguay (Oferol), China (Dongfeng), Indonesia (Gaya Motor) and Malaysia (Naza).

In 2003, it received a minor facelift, getting clear headlights, different rear clusters, new side repeater lamps, chrome badges, a new range of colors, as well as other subtle interior revisions.

[29] Production in Brazil took place in Porto Real, Rio de Janeiro, starting in 2001 with the hatchback, followed by the station wagon version in 2005.

[33] Since 2006, Iran Khodro started exporting the 206 SD to other countries, including Russia, Ukraine, Turkey, Romania, Bulgaria, and Algeria, along with Serbia, Montenegro and Macedonia.

[35] This model was also offered throughout the rest of Latin America, including in Chile, Argentina, Uruguay, Colombia, Ecuador or Mexico.

[10] It is a coupé cabriolet featuring a powered fold-away roof based on the Georges Paulin system, first seen on the 1935 Peugeot 402 Eclipse coupe.

[22] The roof-trunk modules, specific to the CC are manufactured in Cerizay, France, by the French company Heuliez,[37] which is specialized in producing short series for niche markets such as convertibles or station wagons.

The new 'hot hatch' used the 2 litre EW10J4S engine, which produced 175 bhp (130 kW; 177 PS) thanks to variable valve timing and modified inlet and exhaust manifolds.

[40] It is essentially a Peugeot 206 SW station wagon with a rugged SUV-like bodykit and higher and tougher suspension.

[48] It is marketed between the original 206 and the European 207, having the Volkswagen Fox, Renault Clio Campus and the Chevrolet Agile as its main competitors.

[49] The Brazilian 207 has also been criticized because it was perceived essentially as a facelifted 206, despite Peugeot's efforts to market it as an entirely new car and even selling it at a higher base price.

[50] In February 2009, Peugeot announced that this revised model will be made at the Mulhouse plant in France for the European (left-hand drive only) market, badged as the 206+.

In May 2009 the company announced the recruitment of an additional 450 workers to support production at Mulhouse of the 206+ and the two door 308 models also assembled at this facility.

IKCO had redeveloped the 207i using parts manufactured in Iran, India and China and launched the production of a vehicle extremely close to the one supplied by Peugeot.

[59] In 1999, Peugeot Sport unveiled the 206 WRC, and it competed for the first time in that year's World Rally Championship, with French tarmac veteran and long-time marque stalwart Gilles Panizzi narrowly failing, against a resurgent reigning champion in Mitsubishi's Tommi Mäkinen, to win the Rallye Sanremo.

For 2001, Grönholm competed alongside two refugees of SEAT's exit from the championship at the end of 2000; compatriot Harri Rovanperä and the French 1994 world champion, Didier Auriol.

Rovanperä and Auriol each contributed single wins, on Swedish Rally and Rally Catalunya respectively (the former to be a sole career win for the Finn, and the latter victory helped by assorted problems for the blisteringly quick debuting Citroën Xsara WRCs), before Auriol left the team at the end of the season.

Grönholm, meanwhile, suffered sufficient reliability woes in the first half of the year such that he could manage no higher than fourth overall in the series, although Peugeot did fend off Ford, with a 1–2 result by the two Finns on the season-ending Rally of Great Britain to successfully defend the constructors' championship title.

The cars were built by Vic Lee Racing and drivers such as Tom Boardman, Luke Pinder and Garry Jennings all drove in the championship.

[citation needed] In 2003, Peugeot launched a popular television commercial for the Peugeot 206 directed by Matthijs van Heijningen,[60] with Creative Direction by Roberto Greco[61] and Giovanni Porro[62] from Euro RSCG of Milan-Italy, known as "The Sculptor", involved a young man in India who sees the 206 advertised in a magazine and then goes about damaging a Hindustan Ambassador (including having an elephant sit on it) and then spending the night welding it.