PSA Peugeot-Citroen will launch 26 new models by 2006 in a bid to raise annual global vehicle sales from 3.3m to 4m.

And the group's chief executive Jean-Martin Folz told AM that a decision on the future of the Ryton plant would not now be taken until 2007 – scotching rumours that the Midlands factory could soon be shut by PSA.

The new models – including this year's 407 range – will help improve business for Peugeot's UK dealers following a difficult year in which the brand lost more than 1% market share.

Folz says Peugeot has been forced to limit sales in the UK – as exchange rates meant it had become an expensive place for exporters to sell cars.

“We have to try to maintain an acceptable profitability,” he says. “We won't let UK profitability fall.” Folz also dismisses claims that Citroen was guilty of discounting its cars too much in the UK. “You have to look at the advertised price reductions against the actual price paid,” he says. “The bottom line is that the Peugeot and Citroen brands have the same profits.”

Folz says Ryton was a very flexible plant, and its success with the 206 means a decision on the factory's future did not have to be taken until 2007. The company has already submitted a claim for state aid to support the plant after 2007.

Over the next couple of years, Peugeot dealers can also look forward to the new 107 minicar, a facelifted 607, and a new 407 coupe. Citroen is planning to launch the C4 replacement for the Xsara, the C2 VTS, and a facelift for the C5. Next year the executive C6 arrives as a replacement for the XM.

PSA's automobile division saw its operating margin fall from Euros 2.18bn (£1.47bn) in 2002 to Euros 1.23bn (£0.83bn) last year, largely because of the strong Euro and a slump in French sales.