Iran says new deal with French Peugeot to compensate past loss
By Aynur Karimova
A new deal recently signed between Iran Khodro and French Peugeot makes up for a previous loss the French company incurred on Iran by failing its commitments.
This was stated by Iranian Industry Minister Mohammad Reza Nematzadeh last week. However, the minister did not disclose the details of the deal, local media reported.
In March 2015, Peugeot and Iran Khodro finalized a new joint venture deal. However, with the imposition of new sanctions on Iran in April, the French company withdrew its experts from Iran.
Based on the deal, Peugeot was obliged to export 30 percent of cars which were manufactured jointly. Thus, Iran has been demanding compensation for the loss incurred by Peugeot’s withdrawal of its experts from the country.
The amount of the compensation which French auto manufacturing company Peugeot-Citroen PSA should pay Iran is over 200 million euros, Hashem Yekeh Zareh, the CEO of Iran Khodro Industrial Group said earlier.
Iran is one of the biggest producers of cars in the Middle East region. The automobile industry accounts for nearly 10 percent of Iran’s gross domestic product. The latest data shows that Iran ranks 18th on the list of the world’s top auto manufacturers. According to IHS Automotive estimates, Iran’s auto market is on course to average 1.7 million units in annual sales.
However, sanctions on Iran hit the automotive industry hard, slicing production by 1 million units from its peak of 1.6 million in 2011 and leading to 100,000 job redundancies.
Before sanctions, Peugeot occupied 22 percent of Iran's car market, but withdrawal from Iran caused huge losses for the company.
The French car manufacturer became the target of criticism in Tehran in 2012 over its decision to withdraw its investments under U.S. pressure over disputes on Iran’s nuclear energy program.
Meanwhile, experts believe that the removal of international sanctions on Iran in accordance with the Joint Comprehensive Plan of Action between Iran and the group 5+1, which came into force on January 16, will revive the car making industry in the country.
Western and Asian manufacturers from Germany, Italy, Japan and South Korea are exploring a return and the competition is already getting intense for a share of the upside.
Iran-Khodro was among the first Iranian companies to sign a deal with foreigners after sanctions were removed on January 16. The company signed a deal with Peugeot during President Hassan Rouhani’s recent trip to France. The deal confirms a 50-50 venture production of cars in Iran by Peugeot and Iran Khodro.
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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