PSA Peugeot Citroën, which has operated in Iran for more than 30 years, and Iran Khodro have signed a joint venture agreement to produce latest-generation vehicles in Iran.

The 50:50 joint venture lays the foundations for a strategic partnership between the two companies, according to a PSA release. It is expected to invest up to €400 million over the next five years in manufacturing and R&D capacity. This investment will contribute to facilitate the development of a competitive manufacturing base for producing, launching and marketing Peugeot 208, 2008 and 301 models, fitted with latest-generation engines.

“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,” said Carlos Tavares, Chairman of PSA’s Managing Board:

The agreement provides for the restoration of contractual relations concerning the manufacture of Peugeot-branded vehicles currently produced in Iran. It will also pave the way for creation of a joint venture on an industrial site in Tehran to produce new latest-generation Peugeot vehicles, on a platform that will also be used by Iran Khodro to develop its own vehicles. In addition, vehicles will be exported across the region.

Coming one week after international sanctions were lifted, this agreement marks the beginning of a new chapter for both partners, adds the release. The first vehicles will 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 and should regain this level within two years to reach two million vehicles annually by 2022. Current estimates put the number of Peugeot cars on the road in Iran at more than four million.

Iran is a key component of PSA development strategy in the Middle East & Africa region, which is its third-fastest growing international market. The Group sold 180,200 vehicles in the region in 2015, up 6.4 per cent.

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