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France's Peugeot provides €446 million Iran deal sweetener

media Reuters

French carmaker Peugeot is to provide Iran Khodro with €427 million in debt waivers, bonuses and discounts as part of a deal signed after the lifting of sanctions against Iran. Iran Khodro signed a deal with Peugeot during President Hassan Rouhani's trip to France last month to form a joint venture that is expected to invest up to €400 million over five years.

To compensate for suddenly leaving Iran under sanctions Peugeot has agreed to waive €80 million of outstanding debts and provide free car parts worth €25 million, and a free production line for the Peugeot 207 model worth €11 million, Hashem Yekkeh Zare, CEO of Iran Khodo said in a statement Sunday.

Peugeot will also provide €311.6 million in discount including €140 million in royalty fees for cars made under Peugeot's name. The result is that instead of receiving €100 royalty for each car sold, it will receive only €30.

Instead of €100, "Peugeot will receive €30 in royalty for two million cars," Yekkeh Zare said.

As part of last month's deal, Peugeot and its French partner Citroen will work with Iran Khodro to eventually produce 200,000 vehicles a year using parts manufactured in Iran.

The aim is to make the Peugeot 208, the 2008 sport utility vehicle and 301 compact models, with the first vehicles expected to roll off the production line in 2017.

The spokesman for Peugeot, Olivier Salmon refused to comment on the deal except to say that it was “balanced” and that both companies would benefit.

Zare also said that Iran was in negotiations with Mercedes Benz and Volkswagen as well as Italian car maker Fiat.


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