PSA Peugeot returns to Iran by a JV deal with Pars Khudro

According to a recently published TechSci report, “IranTyre Market Forecast & Opportunities 2020”, passenger car tyre industry covers a dominating volume share of more than 65% in the Iran tyre market as of 2014. Moreover, with the rise in sale of the vehicle segment in approaching years, there would be a ramping demand for passenger car tyres in the country. Consequent to which the Iran tyre market is likely to be affected in a favorable manner during 2015-20.

French manufacturer PSA Peugeot Citroen enters into a deal with Iranian Pars Khodro and returns back to Iran after four-years with the lifting of the sanctions in the country. Iranian car maker Iran Khodro is expected to start manufacturing of three new models of Peugeot 208, 2008 and 301 model, as a part of the joint venture (JV) deal. Both the partners are expected to invest around USD435 million (EUR400 million) over coming five years and are targeting to produce almost 200,000 cars annually. The production is anticipated to begin in the second half of 2017. The French car manufacturer forecasts the total car market of Iran to reach around 8 million units by 2025, of which PSA expects to sell around 1 million cars.

Chief Executive at Peugeot, Mr. Carlos Tavares said “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.”  The deal will mark the return of Peugeot to Iran after a four-year absence. Iran’s Khodro, which is 14% owned by the Iran government, was Peugeot’s partner before the French company decided to shut down its operations in 2012, on account of the international sanctions. Before the sanctions were formed, the country was Peugeot’s second largest market after France, with a sales volume of around 400,000 cars annually.

According to the French car maker, there are around 3 million Peugeot cars on Iranian roads and the brand has around 30% market share in passenger cars in the country. Mr. Hashem Yezehzare, the President and Chief Executive of Iran Khodro said, “The strategic partnership with PSA will serve as a unique platform, for both parties to capitalize 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.”