PSA Group and Iran Khodro signed the final joint venture agreement today to produce the latest-generation vehicles in Iran.

The agreement opens up new possibilities for customers in Iran, who will be offered comfort-built vehicles with safety and environmental standards in the Peugeot market.

Commenting on the agreement, Jean-Christophe Quémard, executive vice-president, Middle East & Africa, said: "Today marks a crucial milestone in our project with Iran Khodro. The two partners conducted discussions as announced during President Hassan Rouhani's visit to Paris in January 2016. I am proud to be bringing the best in PSA Group technology to our Iranian customers."

This 50-50 joint venture is expected to invest up to €400 million (Rs 3,055 crore) over the next five years in manufacturing and R&D capacity. The investment will contribute to the development of a competitive manufacturing base for producing, launching and marketing Peugeot 208, 2008 and 301 models, fitted with latest-generation engines.

The agreement provides for:

1. The creation of a joint venture on an industrial site in Tehran to produce new latest generation Peugeot vehicles, on a platform that will also be used by Iran Khodro to develop its own vehicles.

2. The capacity to export joint-venture products across the region.

3. The restoration of contractual relations for the production of Peugeot-branded vehicles currently sold in Iran.

The first vehicles will roll off the production line at the Tehran plant in the second half of 2017. Iran is a key component of PSA's development strategy in the Middle East & Africa region, which is the PSA Group's third-fastest growing international market. Current estimates put the number of Peugeot cars on the road in Iran at more than 4 million.

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