PSA Peugeot Citroen will have to pay Iran Khodro hundreds of millions of euro in compensation for losses after the French carmaker was forced to quit the country over international sanctions.

Peugeot withdrew from the Iranian market in 2012 as a result of sanctions over the country’s nuclear program, which extended at that time to the automotive industry as well. Before the forced exist, the French automaker sold 473,000 units in 2011, being the biggest-selling European carmaker in pre-sanctions Iran. Current estimates put the number of Peugeot cars on the Iranian roads at more than 4 million. But to fully return to the automotive market, PSA will have to pay to its partner Iran Khodro over 400 million euros (446 million dollars) in compensation for losses after the 2012 actions, the managing director of the country’s largest carmaker recently revealed.

“Based on the deductions, 427.6 million euros of compensation will be paid by Peugeot because of the losses,” Hashem Yekke-Zare, managing director of Iran-Khodro Company, was quoted by the ISNA news agency to have declared. He said the compensation would be mostly in services and discounts, including auto parts for current models being produced in Iran and devices for Peugeot 207 models. Peugeot has also written off 11 million euros of Iran Khodro debts plus 65 million euros in royalties owed between 2012 and 2016, Yekke-Zare added, adding that 317 million euros would be in the form of future co-operation, including training.

Last month, PSA announced it signed a deal that marked the rebuilding of ties with its long-time partner Iran Khodro. The venture’s plan is to start the production of 100,000 vehicles a year in the second half of 2017, and to double the output capacity at a later stage.

Via Reuters


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