Peugeot to take part in a 400-million-euro investment in Iran

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PSA Peugeot Citroen and its Iranian partner announced a five-year investment plan to upgrade their auto plant in the country.

The Paris stop during the first European tour of the Iranian President Hassan Rouhani concluded with a business deal for PSA Peugeot Citroen, an agreement which the French carmaker considers the first industrial accord signed by a western company since the economic sanctions on Iran were lifted this month. The deal marks the rebuilding of ties between PSA and its long-time partner Iran Khodro, the biggest automaker in the country. The venture’s plan is to start the production of 100,000 vehicles a year in the second half of 2017, and to double the output capacity at a later stage. For revamping the 50 years old factory near Teheran, both sides agreed to invest 400 million euros (435 million dollars) in the next five years for building Peugeot’s 208 hatchback, 301 sedan and 2008 crossover. “This strategic agreement turns the page on the period of international sanctions and enables PSA and Iran Khodro to start a new chapter in their 30-year history of cooperation,” Peugeot Chief Executive Officer Carlos Tavares said at a Paris press conference. Iran Khodro and Peugeot will add two other models to their production line later, with 50 percent of production to be undertaken in Iran.

The Iranian market reached a peak of 1.6 million vehicles in 2011. It should regain this level within 2 years, reaching 2 million vehicles a year by 2022, PSA said. Current estimates put the number of Peugeot cars on the road in Iran at more than 4 million. Peugeot withdrew from Iran in 2012 as a result of sanctions over Iran’s nuclear program. Before the forced exist, the two partners sold 473,000 units in 2011 in the country. PSA’s French rival Renault said it also plans a “much more massive” presence in Iran as well, expanding Renault’s operations by closing more deals with a wider range of local partners.

Via Bloomberg