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.