Armand Peugeot was born to a family of industrialists in the austere "Doubs" district of eastern France. Since 1810, the family had manufactured a wide range of practical goods ranging from corset bones, coffee grinders, spectacle frames, winding mechanisms for clocks, and carts.
After graduating from an engineering school in Paris, Armand visited Leeds, then the heart of manufacturing in Britain, and came back convinced that the future of horses as a means of transport was limited. Within the family firm, he first manufactured tricycles and bicycles, some of which used Daimler engines.
In 1894, he fielded several cars in France's first motor race, the 1,200km Paris-Bordeaux-Paris contest - and Peugeots took three of the top four places. Another Peugeot arrived tenth. A key feature was that it used revolutionary inflatable tires, and was driven by two brothers from Clermont-Ferrand, Andre and Edouard Michelin.
Armand decided to build an in-house engine, developed by Peugeot engineer Gratien Michaux. But his cousin Eugene, the family firm's largest shareholder, balked. So Armand created Société Anonyme des Automobiles Peugeot on April 2, 1896, recruiting shareholders among his family relations together with other industrialists.
The plant he set up at Audincourt, in eastern France, began operations in 1897 with 125 workers. It produced one car a week that year; three a week in 1898; and was building 10 a week in 1900. In 1897, the fledgling company lost FF52,000, but became profitable immediately afterward.
Restless, Peugeot tinkered with other businesses. He began to build engines for boats and, in Paris, created a delivery car rental company. But the ventures foundered and Armand's business was only saved by the lightweight Bebe Peugeot model in 1905. A little two-seater with a 6hp engines, the Bebe Peugeot sold some 400 units that year. Meanwhile, family squabbles were healed. Armand, who had no son, authorized his nephews to build small cars though a new company, Les Fils de Peugeot Frères. It merged with his company in 1910.
When Armand stepped down in 1913, Peugeot had become France's largest carmaker with a market share of 20 percent. It built nearly 10,000 cars that year, double Renault's total.