Despite Iran’s investment conditions, Peugeot officials have expressed happiness over the recent deal, with Quemard calling it a win-win contract. Their satisfaction may partly be due to a likely 15% hike in car production by the end of the current Iranian calendar year, until March 20, 2017. If forecasts hold true, Iran will produce more than 1 million vehicles by year-end, although the figure will still be far lower than the record-setting 1.6 million vehicles produced in 2011. IKCO will be responsible for about half of the output.
The deal with PSA Peugeot Citroen is not the only IKCO initiative for developing the Iranian automotive industry. IKCO executives are also hammering out a deal with Mercedes-Benz, a subsidiary of Germany-based Daimler, to locally manufacture commercial vehicles and passenger cars. According to the state-run Iran Daily, a letter of intent will be signed in the coming months, allowing the popular German giant to begin operations in Iran.
Mercedes-Benz is also negotiating with Iranian companies on the local production of trucks and power-train components, according to the newspaper. It has already agreed on a “comprehensive re-entry” into the Iranian market with Iran Khodro Diesel and the Dubai-based Mammut Group and is preparing to return as a shareholder in the Iranian Diesel Engine Manufacturing Co., which is based in the northwestern city of Tabriz.
Separately, earlier in April, Iran’s English-language Press TV reported that Volkswagen and its Skoda brand are also among the multinational automakers that have approached Iranian carmakers. VW is now weighing the selection of a local partner, likely Kerman Motor or Mammut Group, to position itself in the race to capture market share in Iran. Meanwhile, the Italians have wasted no time getting into the race.