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The same year, Peugeot returned to racing with a team of three driver-engineers (a breed typical of the pioneer period, exemplified by Enzo Ferrari among others): Jules Goux (graduate of Arts et Metiers, Paris), Paolo Zuccarelli (formerly of Hispano-Suiza), and Georges Boillot (collectively called Les Charlatans), with 26-year-old Swiss engineer Ernest Henry to make their ideas reality.The company decided voiturette (light car) racing was not enough, and chose to try grandes épreuves (grand touring).

Armand Peugeot built the company's first car, an unreliable steam tricycle, in collaboration with Leon Serpollet in 1889; this was followed in 1890 by an internal combustion car with a Panhard-Daimler engine.Peugeot retains a large manufacturing plant and Peugeot museum there.In February 2014, the shareholders agreed to a recapitalisation plan, in which Dongfeng Motors and the French government each bought a 14% stake in the company.Due to family discord, Armand Peugeot founded the Société des Automobiles Peugeot, in 1896.The Peugeot company and family are originally from Sochaux, France.The first digit has always signified the car's size and the final digit has indicated the generation of vehicle.

In 1933, attempting a revival of fortune, the company unveiled a new, aerodynamically styled range.

For the 1913 French Grand Prix, an improved L5 (with 5,655 cc (345 cu in) engine) was produced with a pioneering ballbearing crankshaft, gear-driven camshafts, and dry sump lubrication, all of which soon became standard on racing cars; Zuccarelli was killed during testing on public roads, For the 1914 French GP, Peugeot was overmatched by Mercedes, and despite a new innovation, four-wheel brakes (against the Mercedes' rear-only), Georges proved unable to match them and the car broke down.

During the 1920s, Peugeot expanded, in 1926 splitting the cycle (pedal and motor) business off to form Cycles Peugeot, the consistently profitable cycle division seeking to free itself from the rather more cyclical auto business, and taking over the defunct Bellanger and De Dion companies in 1927.

The first Peugeot automobile, a three-wheeled, steam-powered car designed by Léon Serpollet, was produced in 1889; only four examples were made.

Steam power was heavy and bulky and required lengthy warmup times.

In 1914, Boillot's 3-liter L5 set a new Indy lap record of 99.5 mph (160.1 km/h), and Duray placed second (beaten by ex-Peugeot ace René Thomas in a 6,235 cc (380 cu in) Delage).