Booming production has persuaded French car manufacturer PSA Peugeot Citroën to break with long-standing industry tradition and abolish the three-week summer shutdown at Peugeot's Ryton plant in Coventry.

The decision, which will lead to the creation of 700 temporary jobs, came as the company announced that the UK plant had been chosen in preference to factories in France, Brazil and Argentina as the sole producer of a new model in Peugeot's successful 206 range.

PSA described the announcement as a "huge confidence boost" for Ryton whose 3,000-strong workforce are turning out almost 4,300 cars a week. The factory is expected to produce around 200,000 cars for the year as a whole - including 60,000 of the new model.

The Peugeot 206SW, a roomier version of the existing three and five-door hatchback models, will make its debut at the Geneva motor show in March and go on sale in the UK this summer.

Peugeot said yesterday that because of the projected production volumes it had reached agreement with Ryton employees that continuous working would take place at the plant for the first time this year.

The decision means the removal of fixed summer-shutdown holidays, giving manufacturing staff an element of choice about when to take their summer break.

The company, which believes it is the first manufacturer in the UK to abolish the summer shutdown, said it would take on and train up to 700 temporary staff to ensure production levels are maintained.

It said employees would be given a choice, within certain constraints, of when to take holidays. Guarantees will allow up to 25% of employees in any zone to take holiday in any week during the eight-week peak summer period of July and August.

News of the deal and step up in production was welcomed by motor industry unions. Chris Liddell, regional officer of the Transport and General Workers Union, said: "The T&G is pleased that we have been able to negotiate an agreement which secures and creates jobs to maintain production at the same time as ensuring our members get the holidays they want and deserve."

Peugeot said the Ryton plant would build the 206SW for all world markets. Already, 60% of the cars built at the Coventry plant are exported from the UK.

The new model has 28% more boot space than existing versions of the 206 and has greater headroom and visibility for rear seat passengers. In what Peugeot says is a world first for a car of its type, it includes a rear window that can be opened independently of the tailgate.