Peugeot and Citroen has announced £155m of investment to develop a turbocharged three-cylinder petrol engine from 2013.
The announcement is in addition to PSA's committment to building normally-aspirated 1.2-litre three-cylinder engines from early 2012 in its Tremery plant in eastern France.
The turbocharged version of the small-capacity petrol engine will be built at the firm's Douvrin plant in northern France, with production scheduled to begin a year later.
PSA say the new family of three-cylinder engines will be petrol only and will meet the Euro VI emissions standards.
Robert Cullen
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