Economy, Auto

PSA Plans to Export Iran-Made Cars

PSA Plans to Export Iran-Made Cars
PSA Plans to Export Iran-Made Cars

PSA Pegueot Citroen plans to export cars it produces in Iran with local partner Iran Khodro, the automaker's boss for the Middle East and Africa region has said.

"We plan to establish local production in order to export cars from our joint venture factory,” PSA head of MEA region, Jean-Christophe Quemard, told Automotive News Europe in an email.

PSA stopped supplying complete knockdown versions of its aging Peugeot 206 and 405 models to Iran Khodro in 2012 under pressure from then shareholder General Motors, which has since sold its 7-percent stake in PSA.

European and US carmakers had to stop doing business in Iran because economic sanctions against the country were extended to the automobile sector.

Now PSA wants to invest in a local factory to produce current-generation models that it will sell inside and outside Iran. A PSA spokesman declined to reveal the names of the other countries.

Currently, Iran Khodro supplies Peugeot vehicles to Azerbaijan, Iraq, Armenia, Uzbekistan, Turkmenistan, Syria and Afghanistan, according to a report by Press TV. That report said PSA and Iran Khodro would establish a 50-50 joint factory that would export 30% of its output.

The PSA spokesman said discussions are in progress with multiple potential Iranian partners, including Saipa, which used to produce Citroen models, but talks are most advanced with Iran Khodro.

Industry watchers say it will likely be several months before the sanctions are lifted completely. The European Union, for example, has agreed to end sanctions but has not yet said when the change will take place.

PSA will also likely begin to use Iran as an export hub once it has begun to produce volumes to meet strong demand in Iran.

“As a first step, they will probably go back to the structure they had before, i.e. importing CKD kits and assembling them locally,” Sascha Gommel, an analyst for Commerzbank, said. “Exports would probably only be a second step.”

  350,000 Peugeots

About 350,000 Peugeot-badged vehicles were registered in Iran last year, according to the French carmaker.

The PSA spokesman said Iran Khodro began sourcing parts through intermediaries when the French automaker stopped supplying it CKD kits in 2012. This helped maintain the French brand's near-30% share of the Iranian market share.

The PSA spokesman said that the automaker does not profit from the sale of those models and does not include them in its global unit sales.