Peugeot, Iran Khodro to sign JV deal soon

Iran's media say French giant automaker Peugeot will form a joint venture with the country's leading car manufacturer Iran Khodro.

The Persian-language Iran newspaper said on Tuesday that final talks over the JV have been held in Paris and the two sides are expected to sign a deal to the same effect “within the next few weeks”.

Each side will have a share of 50 percent in the venture, Iran added.  

The report said Peugeot will be committed under the deal with Iran Khodro to provide investment, technical know-how, new products and the related assembly lines. 

Iran Khodro in return will be committed to provide after sales services, the sales networks as well as its own share of the assembly lines. 

“This is for the first time that a foreign company is investing in Iran's auto sector with such a huge share of investments,” said the report.  

It further added Citroen, another French automaker which is part of Peugeot, is in talks over a similar partnership with their old Iranian partner – Saipa.

No details on the talks have emerged to the media but Iran said it is expected that talks between Saipa and Citroen will be finalized within the next three months. 

The automobile industry is seen as Iran’s biggest non-oil sector. It accounts for nearly 10 percent of the country’s gross domestic product (GDP). Latest data shows that Iran ranks 18th on the list of the world’s top auto manufacturers.

Iran Khodro and Saipa companies account for more than 90 percent of the total domestic production in Iran.

Other figures show the country also relies heavily on imports.  Iran imported 102,000 cars during last Persian calendar year (ended March 20, 2015,) showing a 31% year-on-year increase.  

Global businesses are already exploring the opportunities to return to the Iranian market once the US-engineered economic sanctions against the country are lifted through an emerging nuclear deal between Iran and P5+1 over the country’s nuclear energy activities. 

To the same degree, many in Tehran have recently called for efforts to bring in foreign investments in the country’s lucrative auto industry. 

Nevertheless, there is a growing emphasis among industrialists that any foreign investment in this sector needs to focus on production. They say there should be a shift of attitude in the eyes of investors toward Iran as a country which needs to be a hub for production of cars and not a hub for automakers to merely sell their products.    

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