French carmaker PSA Peugeot Citroen says it has signed a final agreement with Iran Khodro to form a joint venture to produce vehicles in Iran.
PSA has announced in a statement that the agreement provides “a crucial milestone” in its cooperation with Iran Khodro.
This 50/50 joint venture is expected to invest up to €400 million over the next five years in manufacturing and R&D capacity, Reuters has quoted PSA as announcing in its statement.
This investment will contribute to the development of a competitive manufacturing base for producing, launching and marketing Peugeot 208, 2008 and 301 models, fitted with latest-generation engines.
Peugeot has announced that Iran Khodro can use the platform that will be created as a result of the joint venture to develop its own vehicles, as well. It will also provide the capacity to export joint-venture products across the region, the company added.
The first vehicles are expected to roll off the production line at the Tehran plant in the second half of 2017.
The Iranian market reached a peak of 1.6 million vehicles in 2011. It should quickly regain this level and reach 2 million vehicles a year by 2022. Current estimates put the number of Peugeot cars on the road in Iran at more than 4 million, Reuters added.
Iran is a key component of PSA's development strategy in the Middle East & Africa region, which is the PSA Group's third-fastest growing international market.
Iran Khodro presents itself as the biggest automotive group in the Middle East and already has set up production lines in Venezuela, Belarus, Senegal, and Azerbaijan. It dominates Iran’s massive market along with another Iranian auto major - SAIPA.
Over the past months and specifically in the wake of the removal of sanctions against Iran, several leading European car manufacturers have been discussing potential partnership deals with Iran Khodro. They included Volkswagen, Renault, Mercedes-Benz and Fiat among others.