Peugeot Wants to ‘Strengthen Image’ in Iran Market

Peugeot Wants to ‘Strengthen Image’ in Iran MarketPeugeot Wants to ‘Strengthen Image’ in Iran Market

Peugeot Citroen has confirmed it is in talks to cooperate with Iranian carmaker Iran Khodro, according to Peugeot brand chief Maxime Picat.

"We are speaking to our Iranian partners on a weekly basis about how and when we can start our activities," he told Germany's Manager Magazin.

Iran and world powers reached a framework agreement last month over Tehran's nuclear energy program, a step towards a final pact that could terminate nuclear related sanctions and start new economic cooperation between Iran and the global community.

Picat said he hoped an agreement could be reached in June and sanctions would then be lifted.

In the medium term, Peugeot would like to manufacture cars in Iran, he said. "We are thinking about launching a joint venture with [Iran] Khodro with which we could cover the whole spectrum from procurement to manufacturing and the sale of spare parts," he announced.

Peugeot, which used to sell 400,000 vehicles a year in Iran, would initially export higher-value models from Europe to Iran to "strengthen our image in Iran", Picat said, and later seek to make cheaper vehicles locally.

The report in the German magazine would be the first official confirmation that Peugeot has been pursuing talks with the Iranian carmaker.

Based on a new joint venture contract, the European side is required to export 30% of the jointly manufactured products, Mehr news agency reported in March.

"The terms and conditions of the contract are not comparable with any of the previously signed agreements with Peugeot," said IKCO managing director, Hashem Yekke-Zare at the time, anticipating that the new deal will help Iran become a major car exporting hub in the region.

“IKCO is authorized to stop selling the joint products in the domestic market if Peugeot fails to meet its obligations regarding the cars’ export,” said the IKCO head.

It is likely that Peugeot's admission comes at a time when other international car producers have announced their intention to reenter the Iranian auto market, latest of which is General Motors' Chevrolet brand which has just this week reportedly been given a license to sell in the local auto market.