Peugeot to build car manufacturing factory in Iran

Business Materials 10 March 2015 17:34 (UTC +04:00)

Baku, Azerbaijan, March 10

By Umid Niayesh - Trend:

The Islamic Republic and the French giant carmaker Peugeot have agreed on establishing a joint car manufacturing plant in Iran.

Iranian car manufacturer Iran Khodro(IKCO) will have a 50-percent share from the deal, Hashem Yekeh Zareh, the managing director of the IKCO said while unveiling the details of a recent agreement which was signed with the French company.

Based on the agreement, a joint research center also will be established, Yekeh Zareh said, Iran's Fars news agency reported March 10.

The new company will produce new car models, he said, adding 30 percent of the jointly manufactured cars will be exported according to the agreement.

Zareh further said that if Peugeot fails to export the mentioned figure, its share from Iran's domestic market also will be decreased proportionally.

Iran Khodro had set a target of producing 1.8 million cars by 2025, he said, adding the company's foreign partners including Peugeot, Renault, Suzuki and one other European company-which will join the cooperation by next year- will share almost 50 percent of the joint production.

The project's aim is taking the car market from Chinese manufacturers, Zareh said.

"We plan to manufacture cars with high quality and low price in comparison with Chinese cars," he added.

The French car makers Renault SA and PSA Peugeot CitroënSA have taken initial steps toward resuming deliveries to Iran, previously one of their biggest markets.

Iran's auto industry has been a major casualty of penalties imposed over the Islamic republic's nuclear program, with production plummeting and workers laid off because of the ensuing economic slowdown.

U.S. sanctions on the auto industry in 2013 were the main cause, on top of American and European bans on Iranian bank transactions abroad. The mentioned sanctions were lifted after an interim nuclear agreement was reached between Iran and world powers and a final accord is still on the horizon, raising the prospect of better times for the industry.

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