PSA Peugeot CitroŽn has signed a deal worth €400 million for production of cars in Iran in partnership with Iran Khodro.
2010 file photo: Peugeot 207i manufactured by Iran Khodro
The French carmaker PSA Peugeot CitroŽn said on Thursday that it had signed a binding contract with Iran's leading vehicle manufacturer Iran Khodro to produce a range of cars in the country.
Carlos Tavares, chief executive of PSA, said at a press conference in Paris that the value of the deal stands at €400 million.
Tavares added that the deal "turns the page on the period of international sanctions" and allows the group and Iran Khodro to start a "new chapter in their 30-year relationship", the Financial Times reported.
This came as Iran's President Hassan Rouhani arrived in Paris on the second leg of his European tour that has already taken him to Italy.
Tavares further emphasized that PSA will invest in modernizing platforms, particularly in the main Iran Khodro site near Tehran. The investment will also allow for the export of vehicles to the region, FT further quoted the official as saying.
PSA will beging by producing 200,000 cars a year in a 50:50 joint venture, producing the Peugeot 208, 2008, and 301 models. Vehicle production will start in the second half of 2017, the report added.
Iran was Peugeot's second largest market before the French automaker left the country in breach of contract, idling a massive assembly line which manufactured vehicles from kits of parts.
The company reportedly quit Iran under political pressure following a partnership agreement with General Motors which the US company terminated later.
It now faces a backlash from its abrupt pullout from Iran in 2012.
Last November, Iran Khodro Managing Director Hashem Yekke-Zare said Peugeot had submitted to all conditions demanded by his company for cooperation.
"Setting up a 50-50 joint venture, turning Iran to the regional center of Peugeot exports and transferring technology as well as investment were Iran's conditions for cooperation which the company has accepted," he said then.
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