PSA Middle East and AfricaIran – The OEM has operated in the country for over 30 years but has now signed an agreement with Iran Khodro for the local production of latest-generation vehicles, after the removal of international sanctions against Iran. The two partners will have equal stakes.

An investment of €400 ($436.2m) will be made over the next five years in manufacturing and R&D capacity. PSA said this would “facilitate the development of a competitive manufacturing base for producing, launching and marketing Peugeot 208, 2008 and 301 models, fitted with latest-generation engines”.

Key points of the agreement, which is due to be implemented in mid-2016, include:

The restoration of contractual relations relating to the production of Peugeot-branded vehicles currently made in Iran;

The establishment of a joint operation on an industrial site in Tehran to manufacture latest-generation Peugeot vehicles, on the same platform which will be used by Iran Khodro to develop its own models. The start of production is scheduled for the second half of 2017;

The creation of capacity to export JV products across the region.

Carlos Tavares, chairman of PSA, said the deal would enable the French OEM and Iran Khodro “to start a new chapter in their 30-year history of cooperation”.

Hashem Yekehzare, president and CEO of Iran Khodro, commented that it would “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”. He added: “A particular benefit of this partnership is to bring cost-effective and the best automotive technology to the customers.”

PSA regards Iran as a key component of its development strategy in the Middle East and Africa, its third-fastest growing market. The Group sold 180,200 vehicles in the region in 2015, an increase of 6.4%.