76 Part Makers included in IKAP Contract/Peugeot Pricing in Iran is in Direct Relation with Exchange Rate Oscillation

Khodrocar - PSA Executive Vice-President, Africa-Middle East, Jean-Christophe Quémard, in search of better relations with Iranian automobile journalists, said on Wednesday night in a news summit as an answer to Khodrocar Journalist regarding the PSA’s specific plans to control the outcome of exchange rates oscillations in Iran and its side effects on PSA’s products in this country: "Exchange rates in Iran is like rain, completely out of our control and PSA cannot do anything about it. We try to save more and more and cut down the expenses on the production process of the products, but yet 30 percent increase in exchange rates is crazy, nothing we can do to control it.”

"76 Iranian domestic part makers are in contract with IKAP to localize Peugeot products in Iran. There are some works to do to finalize the contracts, yet almost the same number are in contract with SAIPA-Citroen as well.” Said Quémard in relation to Khodrocar journalist about the number of Iranian domestic part makers involved in PSA contracts.

"Peugeot is looking forward to localize the 2008 model up to 60 percent. Yet it is now just a bit over 20 percent and that’s because of various problems such as exchange rate oscillations. There are more than one thousand 2008s produced and sold by far, nothing major but it will increase undoubtedly.” Said PSA Executive Vice-President, Africa-Middle East regarding 2008 model share of localization in Iran.

Jean-Christophe Quémard also emphasized: "Please let go of the idea that PSA is not interested to localize in Iran. It is the best way for us to make profit but some difficulties of Iran car market and economy led us far from our target.”

"To speed up car making in Iran, we started sending parts instead of kits. That is what we do all around the world. But Iran is not ready for it now. Even if they claim that they are over with importing as CKD, that is only a claim, because Iran is not ready in infrastructures like the banking system or monetary system. We have underestimated the obstacles, we hopped that the economy will turn better, but it did not. Looking at and comparing with our competitors, they did not have any better achievements neither.” Said Quémard mentioning major difficulties.

It is now over 18 months past the Iran-PSA GV. Quémard referred to activities done through the period: "Huge employment happened in the period. Almost 90 percent of the employees of the GV are Iranians. We have sent many to France to see the factories up closed. We also hired many from the supplier chain to expand production infrastructures. We have also selected some of the suppliers beforehand in order to speed up the production procedures.”

"Peugeot is still number one car brand in Iran.” Said Quémard. "Renault is a serious competitor to us but we are not afraid of them. We have expanded our portfolio through contracts with IKCO and SAIPA to gain even a greater market share in Iran.” He added.

"Iran is capable of producing raw materials like aluminum, copper and steel and that makes it competitive. Unfortunately most part makers could not make it to become up dated. Many of them have the potential to operate in global level but need to upgrade their technology to be able to use their opportunity to compete in global level.” Added PSA Executive Vice-President, Africa-Middle East.

"Old products like the 206 model are now out dated and unreliable comparing to today's standards. Yet there are no substitutes from PSA. In short term. New cars like the 2008 model bare updated standards, 5 star safety grade, modern options, economy fuel consumption and low emissions. Such product will not come cheap in short term. PSA has no substitute by far, but it will not be left as such for long as well.” Said Jean-Christophe Quémard.

He added about the new 85-step Iran’s automobile standards: "These are not new regulations for us but some are extreme as well. We have pushed our partners to correct old products to follow up the new standards. Not each and every one of the old products are going to meet the requirements of the newly stated standards or pass them.”

"There are no plans for these two new subsidiaries of PSA in Iran yet. We are now concentrated on our IKAP and SAIPA-Citroen contracts and it is too soon to discuss anything regarding these two brands in Iran, especially with their half-breed American heritage.” Said Quémard regarding PSA's new American subsidiaries.

"Iran has great market for hybrid and EVs and that is because of the extreme air pollution. The drawbacks are the difficult and expensive infrastructures that nobody will invest on. In the other hand, the price for fossil energy in Iran is still very low compared to electricity, therefore production of EVs or hybrids are not economically reasonable.” Said Quémard regarding production of high-tech electric and hybrid vehicles in Iran in the future.