Peugeot-Citroen back on the road in Iran with deal to build cars

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Lifting of sanctions allows French carmaker PSA to resume partnership with Tehran-based Iran Khodro, while Boeing confirms contract for airliners

The French carmaker Peugeot-Citroen (PSA) has announced its return to Iran under a 400m joint venture with its old partner Iran Khodro in Tehran that has been made possible by the lifting of nuclear sanctions.

At the same time, Boeing has confirmed reports it will start selling airliners to Iran following the nuclear accord reached in 2015.

The first cars produced under the PSA venture are set to be sold in February, with the aim of producing 200,000 vehicles a year by 2018.

PSA is the first western carmaker to announce a return to Iran since many economic sanctions were lifted in January when a landmark nuclear deal with world powers took effect.

Today is the comeback of PSA to Iran. We are very proud, said Jean Christophe Quemard, who oversees PSAs Middle East and Africa operations.

This company is committed to Iran and through this Iranian company we show that we are really committed for the future and ready to invest in this country.

The 50-50 joint venture will manufacture three models the Peugeot 208, the 2008 sport utility vehicle and 301 compact using parts mostly made in Iran.

Iran Khodros chief executive, Hashem Yekeh-Zareh, said 30% of the cars produced would be exported to the Middle East and beyond.

PSA had to pull out of Iran, its second-largest market, in 2012 when the toughest sanctions were imposed. The costs were heavy, with Yekeh-Zareh stating in February that Iran Khodro would receive 427m in compensation and debt write-offs for its French partners sudden departure a figure that was never confirmed by PSA.

Irans industry and commerce minister, Mohammad Reza Nematzadeh, said more joint ventures were on the way.

We are optimistic. We hope to hold a similar ceremony for one of Iran Khodros subsidiaries, Iran Khodro Diesel, with a German company, he said.

Nematzadeh did not name the German company but Iran Khodro has been negotiating with Mercedes since the lifting of sanctions.

PSA also said it was working on new contracts with Iran Khodro regarding the building of older models such as the Peugeot 405 and 206. They are already being made in Iran and accounted for a third of new sales in the country last year at around 350,000 units, the company said.

Those units are not currently counted among PSAs 2.97m global sales because they have been made entirely with Iranian and Chinese parts.

Iran is considered one of the most promising growth markets for cars in the world, with only one car for every 100 people six times less than in the European Union and a burgeoning middle class hungry for new models after years of sanctions.

Meanwhile Boeing on Tuesday said it had signed an agreement to sell jetliners to Iran Air, following previous Iranian statements about an historic deal for 100 planes.

Boeing said in a statement that it had signed a memorandum of understanding with state carrier Iran Air expressing the airlines intent to purchase Boeing commercial passenger airplanes.

Boeing gave no figures but the head of Irans civil aviation organisation, Ali Abedzadeh, told the state-run daily newspaper Iran on Friday that the signed deal was for 100 Boeing aircraft.

Such an order would be worth about $11bn at list prices if Iran Air bought only Boeing 737 single-aisle jetliners, and perhaps twice that much if it included a significant number of twin-aisle planes such as the 777 or 787 Dreamliner.

Iran placed a $27bn, 118-plane order with Airbus in January.

With Reuters

Read more: https://www.theguardian.com/world/2016/jun/22/peugeot-citroen-back-on-the-road-in-iran-with-deal-to-build-cars