Iran to Receive €200 mln from France's Peugeot as Compensation

“In the (new) contract with Peugeot, a support package has been defined as compensation, in which cash payment has also been predicted,” Hashem Yeke Zare announced on Sunday.

“The compensation due to be given to Iran Khodro amounts to more than 200 million euros,” he noted.

Peugeot, an arch-partner of the Iranian auto industry, suspended sales in Iran in 2012 under pressure from the US.

After the suspension, the French company lost nearly 10 percent of global deliveries and interrupted a relationship with Iran that dated back to more than 50 years ago.

Earlier on Saturday, Iran’s Minister of Industry, Mine, and Trade Mohammad Reza Nematzadeh had also said that losses due to the suspension of the previous contract will be compensated for in the new deal with the French company.

The new contract whose value stands at €400 million 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 first half of 2017, the reports said.

According to the head of Iran Chamber of Commerce, Industries and Mines, the agreement signed between Iran Khodro and PSA is a “robust” joint-venture partnership between the two countries’ automakers.

The contract is based on joint investment, joint profit and loss, and production with the aim of export, Mohsen Jalalpour has said.

“In this case, if there are losses under this contract, both sides will incur the losses equally,” he noted a few days ago, following a historic visit by Iranian President Hassan Rouhani to France, where several major deals including the one with Peugeot were discussed and finalized.