Iran to become a crucial market for PSA if sanctions lifted: chairman

June 24, 2015 - 0:0

TEHRAN- Iran will become a crucial market for PSA Peugeot Citroen in the Middle East if the western-led sanctions are removed against the country’s economy, the French business magazine L'Usine nouvelle wrote in a June 22 article titled “The programmed return of PSA to Iran”.

But the French group no longer plans to manufacture spare parts in the form of CKD (Complete Knock Down - spare parts batches assembled on site) for Iran’s market; while it intends to make a joint venture with the Iranian carmaker Iran Khodro Company (IKCO), the article said.

Last week, Carlos Tavares, the chairman of the managing board of PSA Peugeot Citroen, said: “We own 30% of the market in Iran. But we do not touch a penny.”

Iran assembles 206 and 405 from parts purchased from different suppliers, including Chinese ones. But, on these models, the French group receives no royalty.

In response, PSA is working on a joint venture with its partner Iran Khodro to manufacture the vehicles, provided of course that an agreement is reached between Iran and the West.

Tightening of international sanctions on Iran, and specially alliance with the American General Motors, forced PSA to leave the Iranian market in 2012. The bonds, however, have never been broken between the French group and its former partner, but relations became complicated.

“During difficult times, they had the impression that we had abandoned. It is therefore difficult to regain their trust in a business agreement,” said Carlos Tavares. To regain that trust and to resettle in the country, PSA is considering a model change, a request that seems to find a chord with Iran Khodro.

The two manufacturers are working on a joint venture owned 50% by each partner to manufacture vehicles adapted to the Iranian market, including the Peugeot 301 notchback sedan.

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).