Iran Khodro and Peugeot will likely finalize an initial deal for €500 million in joint investment in Iran during President Hassan Rouhani’s visit to France on Wednesday, a report said.
Under the 50-50 joint venture, the two carmakers will produce Peugeot 2008 crossover, 208 super and 301 compact, Tasnim News Agency quoted an unnamed auto industry official as saying Sunday.
Iran Khodro and Peugeot will add two other models to their production line later, with 50 percent of production to be undertaken in Iran, the official 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 French manufacture 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 for Peugeot exports and transferring technology as well as investment were Iran’s conditions for cooperation which the company has accepted,’ he said.
The company reportedly plans to sell 400,000 cars in Iran a year. Before slamming the door in Iran Khodro’s face in 2012, the two partners sold 473,000 units.
Peugeot quit Iran under political pressure following a partnership agreement with General Motors which the US company later terminated.
Iran is the Middle East’s largest car market and car making is the country’s biggest industry after oil. According to IHS Automotive estimates, Iran’s auto market is on course to average 1.7 million units in annual sales.
Western and Asian manufacturers from Germany, Italy, Japan and South Korea are exploring a return and the competition is already getting intense for a share of the upside.