Peugeot has reaffirmed its commitment to Coventry after selling its historic home to developers in a £35 million deal.
The carmaker, which is also closing down the Ryton factory just outside the city, will lease back half of the site after sealing an agreement to redevelop the Stoke Works in the city.
The deal, with developers Astral Parkridge, will see new offices and other facilities built on the 83-acre location.
Car production started there in the late 19th Century and passed to the Rootes Group before ceasing in the 1950s.
Many of the buildings, which could be traced back to the original Hillman factory, were flattened five years ago.
Now a new corporate HQ and technical centre will be established on the empty half of the site, where 700 people work.
Roger Lewis, company secretary and legal director at PSA Peugeot Citroen, said: "The timing with the decision to close Ryton is entirely coincidental. We have been planning this project for the last seven to eight years
"This shows that the group is committed to Coventry, which has been the historic HQ and will continue to be so."
Mr Lewis said the new site - which will be leased from the developers on a 15 year contract - would replace the current building which is more than 100 years old.
He said: "While our current offices look all right on the outside, they are very old and are not very suitable.
"The developers will build us a brand new office block on the empty part of the site, and we will move in when it is completed in 20 months time."
The development, which is due to be completed by the end of next year, will see a new 110,000 sq ft corporate headquarters building along with a 60,000 sq ft technical centre.
A new dealer training academy will also be established on the southern section of the site, representing new investment in Peugeot's sales, marketing and after sales operations.
Housebuilder George Wimpey is also involved in the scheme, which will ultimately see up to 1,700 houses, sports facilities, a local centre comprising offices, restaurants, shops and apartments and the realignment of Humber Road.
PSA Peugeot Citroen was advised by property consultants, Gerald Eve on development consultancy, planning and relocation issues.
Chris Kershaw, managing partner at Gerald Eve's Birmingham office, said: "It has taken considerable commitment and determination to take the scheme through the necessary negotiations, planning and development process.
"This sale and leaseback, represents a major investment in Coventry by PSA Peugeot Citroen and we are delighted that the deal is finalised and work has now started on site."
Richard Ludlow, partner and head of agency at Gerald Eve's Birmingham office, said: "This transaction is probably the most significant deal to have taken place in Coventry over the past few years.
"To support the successful regeneration of the site, we have also advised PSA Peugeot Citroen on what is probably the second most significant deal in Coventry - the relocation of Gefco from the Stoke site to its new 229,000 sq ft logistics premises at ProLogis Park."
Work will commence on the Peugeot office building and technical centre this month, with completion in 2007.