PSA Peugeot Citroën and AllurGroup have inked a deal to assemble vehicles in Complete Knock Down (CKD) mode in Kazakhstan.

Vehicle assembly will be take place at the SaryarkaAvtoProm plant in Kostanay, owned by AllurGroup.

The first model off the line in September, 2016, will be a Peugeot 301, the brand’s best-selling car in Kazakhstan. From 2017, average production volume will be around 12,000 units per year with a possibility to extend up to 17,000.

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The plant’s output is first intended for the local market, while to support its sales development, Peugeot is considering an extension of its dealership network, in alignment with expanded production capacity.

PSA Peugeot Citroën and AllurGroup began cooperating in 2013 to produce and distribute Peugeot vehicles in Kazakhstan.

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In September 2013, AllurGroup subsidiary, ArgomashHolding, began producing four Peugeot models, the 301, 3008, 508 and Partner vehicles at its SKD plant in Kostanay.

These vehicles, as well as the Peugeot 408 produced in Russia, are distributed through the AllurGroup dealership network, which now covers Kazakhstan’s largest cities; Astana, Almaty, Karaganda and Kostanay.

The Kazakh automobile market has experienced strong growth in the past few years, more than tripling from 45,000 units in 2011 to 166,000 units in 2013. Local demand is expected to reach 200,000 units in 2015.

“The full cycle assembly of Peugeot cars in Kazakhstan will allow PSA Peugeot Citroën to take full advantage of growth opportunities and become a benchmark player in the Kazakh market,” said PSA EVP operational director Eurasia, Christophe Bergerand.

“We have already seen Peugeot’s sales success in Kazakhstan. This local production project will help improve the Group’s long-term profitability in Kazakhstan and the entire CIS region.”