Ambitious Targets in SAIPA-Citroen Deal

In setting up a joint venture with SAIPA, Iran’s second largest auto manufacturer, the French PSA Group aims to sell Citroen cars that will meet the needs of Iranian customers and then export the cars to the regional markets, said Carlos Tavares, chairman of the Managing Board of PSA Group.

PSA Group is a French multinational manufacturer of automobiles and motorcycles sold under the Peugeot, Citroen and DS Automobiles brands. The second largest car manufacturer in Europe is present in 160 countries and possesses 16 production sites worldwide.

In an interview with IRNA, Tavares noted that if an automotive company is looking to supply a market, they should be aware of the needs of the customers of that market and set up a production base in the closest location to that market.

“This is what we intend to do in the Middle East in collaboration with our Iranian partner,” he said.

He added that the details of the group’s export plans have not yet been settled, but will soon be prepared.

“SAIPA and Citroen will decide which countries are export destinations. These are the countries we will prioritize, and a comprehensive trading plan will be prepared depending on the type of products that will be industrialized in Iran,” he said.

Tavares said that once the details are clarified with SAIPA, Citroen would then explain the deal further through local media.   

“We are confident that the models built in Iran, including B-class vehicles, hatchbacks and crossovers, will be competitive in both Iran and the neighboring countries,” he said.

Tavares added that he found the infrastructures set up at SAIPA’s production site at Kashan “impressive”, adding that it also has a strong managerial and a skilled executive team present.

“We toured the body and paint section and the assembly line. I believe that the company has great potential and through our joint efforts, we will try and boost the performance at this site,” he said.

He added that the site would meet the needs of customers inside Iran as well as the needs of other markets of the region.  

“Iran will become Citroen’s export hub in the region. The most important factor for us in working with SAIPA is quality. If production quality received a boost, we will soon be able to meet our export goals,” he said.

The PSA Group chief further said one of the most important issues in the contract is the local production of auto parts, which will help prevent volatile foreign exchange rates from adversely affecting the prices of products.

“We can develop a solid trade plan if we rely on local production. This is an urgent matter to us and for doing so, we must work with local providers to achieve the highest level of local production possible,” he said.

“Our ultimate goal is to produce cars of the highest quality possible while keeping the prices as low as we can. This procedure will also allow for more widespread exports.”

He added that studies have shown that there is an abundance of well-educated workforce in Iran and the joint company can draw on this vast potential.

Tavares noted that the exceptional workforce could also join the PSA team in the future to receive higher training and return to work in Iran.   

“This will result in a boost of specialty and experience for the team’s workforce,” he said.

“Iranian engineers will at first be responsible for updating the products and tending to local needs. Those who show exceptional talent will be selected to work in the global PSA plants to become better familiar with the group’s technical knowhow.”

Tavares also said exchange programs will involve countries where PSA already works, such as China, Latin America, Russia and Europe, which will give these individuals a growth opportunity.

French carmaker PSA Group signed a framework deal with Iranian counterpart SAIPA to produce and sell Citroen vehicles in the country.

The deal obliges the Paris-based carmaker to invest €300 million ($330 million) over the next five years for the development and production of three Citroen models, which will be sold throughout the country via a network dedicated exclusively to the brand, through a new joint venture, Reuters reported in July.