"We have pumped in US$12 million (Sh1,2 billion) and are looking to employ 200 people and want to start with at least 1,000 units at a go," says Quemard.
It will begin with its famous brand, the 508.
President Uhuru Kenyatta said the move showed that Kenya's manufacturing industry was growing significantly.
The President said that his government would adopt an inward-looking policy that would see firms operating in Kenya being supported by encouraging the purchase of their products.
"My government will continue to enforce the 'Buy Kenya Build Kenya' policy to support companies and businesses that produce [goods] in Kenya," he says.
Peugeot ceased its completely knocked down (CKD) Kenyan assembly in 2004 and thereafter severed links with its franchise holder, Marshalls East Africa, three years later.
The new deal was signed with its new franchise holder, Urysia.
Peugeot's re-entry comes just three months after German carmaker Volkswagen opened a new assembly in Thika, about 45km north of Nairobi.
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