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The French giant carmaker Peugeot has started paying compensation to Iran for withdrawal during sanctions, Amir Hossein Ghanati, director general of Automobile and Automotive Industries Department at the Ministry of Industries, Mine and Trade, said.

The issue of compensation payment for the losses inflicted through the French carmaker’s sudden withdrawal from the Iranian market during the sanctions is forecasted in the new contract with Iran’s leading auto manufacturer Iran Khodro, Ghanati said, Mehr news agency reported Aug. 20.

Peugeot suspended sales in Iran in 2012 when the international sanctions against the Islamic Republic's nuclear program were extended to the automobile sector.

In the same month, following the removal of international sanctions PSA Peugeot Citroën and Iran Khodro signed a joint venture agreement to produce latest-generation vehicles in Iran.

Ghanati further said that Peugeot will fully pay the compensation, but not necessarily in cash payments.

He added that the compensation will be paid to the Iranian side in the course of the agreement implementation.

The Iranian official also said that training of Iran’s human resources is part of the compensation process which will start in the new future.

Based on the agreement between Peugeot and IKCO up to 400 million euros over the next five years will be invested in manufacturing cars in Iran.

The contract envisages the investment by Peugeot in modernizing platforms, particularly in the main Iran Khodro site near Tehran. The investment will also allow for the export of vehicles to the region.

PSA will begin by producing 200,000 cars a year in a 50:50 joint venture, producing the Peugeot 208, 2008, and 301 models. Vehicle production will start in the second half of 2017.

Four million Peugeot cars are currently on the roads in Iran.

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