Citroen maker seals Iran joint-venture deal

Citroen cars will roll off an assembly line in Iran starting from 2018, under a deal between French automaker PSA and Iran's SAIPA finalised on Thursday, PSA said.

The joint venture, in which PSA and SAIPA will each have a 50 percent stake, will see cars produced at a plant in Kashan, some 200 kilometres (120 miles) south of the capital Tehran.

PSA chief executive Carlos Tavares visited Kashan to sign the deal, which follows a landmark nuclear agreement between Iran and world powers in 2015 that opened up one of the world's last untapped markets to global business.

The Kashan plant is used to produce Citroen cars but has not made one since the start of the decade.

The two firms plan to invest "more than 300 million euros ($335 million) in manufacturing and R&D capacity over the next five years," PSA said in a statement.

The move follows PSA's 400-million-euro deal in June with Khodro to build 200,000 Peugeot vehicles a year in Iran by 2018.

PSA, which also produced cars under the luxury DS brand, quit Iran in 2012 under pressure from international sanctions that hit Iran's manufacturing sector hard.

It said it would start exporting cars to Iran from early 2017, and the Kashan plant would start producing three vehicles adapted to the Iranian market in 2018.

"Citroen models will be sold throughout the country," it said.

Some 100,000 Xantia Sedans were made and sold in Iran between 2000 and 2010, and the company says it will open some 150 dedicated Citroen outlets there in the next 5 years, PSA said.

SAIPA's Kashan plant, launched in 2010, currently produces local versions of a 1980s Kia and a Chinese urban 4x4 "crossover".

PSA hopes to produce 150,000 cars a year there by 2021, but officials say the plant could produce up to 200,000.

Relations between Citroen and SAIPA date back to 1966, when they produced and sold 2CV cars.