Former president Mahmood Ahmadinejad's Peugeot 504. © Press Association Images
Former president Mahmood Ahmadinejad's Peugeot 504. © Press Association Images

Peugeot signs deal to make cars in Iran

Will Green is news editor of Supply Management
29 January 2016

PSA Peugeot Citroën has signed a deal to begin producing cars in Iran just a week after sanctions against the country were lifted.

Under the deal between the French carmaker and Iran Khodro a joint venture (JV) will be established to build the latest Peugeot 208, 2008 and 301 models in Tehran.

The JV is expected to invest up to €400m over the next five years in manufacturing and R&D, with a projected 2m vehicles being sold in Iran each year by 2022. The first vehicles are expected to roll off production lines in the second half of 2017.

The agreement includes technology transfers and “significant levels of local content”.

Peugeot has operated in Iran for more than 30 years but pulled out in 2012 because of sanctions. Since that time Iran Khodro has produced Peugeot vehicles under license.

Carlos Tavares, chairman of PSA Peugeot Citroën's managing board, said: “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.

“Our shared ambition is to offer our loyal customers high-tech products to deliver mobility that meets the highest comfort, safety and environmental standards.”

Hashem Yekehzare, president and CEO of Iran Khodro, said: “The strategic partnership with PSA will serve as a unique platform for both parties to capitalise on each other’s competitive advantages, especially given the scale, technology and long-term outlook that the parties are able to bring to their cooperation.

“A particular benefit of this partnership is to bring cost effective and the best automotive technology to the customers.”

Iran's former president Mahmood Ahmadinejad famously drove a Peugeot 504, which was sold at auction in 2011 (pictured) to raise cash for housing projects.

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