PSA Group and SAIPA, Citroen’s historic partner in Iran since 1966, have signed a framework agreement to create a joint-venture to produce and sell Citroen vehicles in Iran.

This 50/50 joint venture lays the foundations for a strategic partnership between the two companies. It will cover the entire value chain, from the design stage right through to vehicle marketing. Manufacturing will take place at the Kashan plant in Iran, which will be 50% owned by the PSA Group.

The joint venture will invest more than EUR300m (US$330.735m) in manufacturing and R&D capacity over the next five years. The agreement will be backed up by technology transfers and a significant level of local content. It will take effect following the signature of the definitive agreement, scheduled for late 2016.

The end of the ramp-up of the first Citroen vehicle will be reached in 2018 in Kashan plant.

Present in Iran since 1966, the Citroen brand will be staging its comeback in the country with the launch of three vehicles specifically designed for the local market. Citroen models will be sold throughout the country via a network dedicated exclusively to the brand.

Commenting on the new agreement, Carlos Tavares, chairman of PSA Group managing board, said: “This agreement opens up a new chapter in our history of cooperation with SAIPA. Our aim is to provide our Iranian customers with modern vehicles that meet the highest comfort, safety and technology standards.”

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