Iranian automaker Iran Khodro Co (IKCO) reduced losses in its Peugeot vehicle division to IRR14.4 trillion ($15.5mn) in the nine months to December 2024, down from IRR110.14 trillion ($118.4mn) in the same period last year, killing off major models as part of its new private owner’s redevelopment plan, Eghtesad News reported on February 24.

The recently privatised manufacturer, which has haemorrhaged money for decades, discontinued its Peugeot 405/Pars model line in spring 2024, following extensive internal deliberations following privatisation. The 40-year-old model, despite still being produced, had lost buyers due to the influx of Chinese players into the local market offering electric and hybrid vehicles. Initially created as a joint venture with PSA Groupe, since merging into Stellantis, the French firm dropped any rights to the production of the model in the Islamic Republic.

The dropping of the Pars lineup resulted in a 42% reduction in overall Peugeot production to 122,750 units, compared with 213,550 units in the previous period, according to consolidated financial statements filed with the Tehran Stock Exchange (TSE).

Despite lower production volumes, the company increased average selling prices to IRR3.95bn ($4,247) per vehicle, up from IRR2.6bn ($2,796). Total revenue from Peugeot sales reached IRR484.2tn ($520.6mn) against production costs of IRR498.5 trillion ($536mn) on the back of an agreed price increase due to the weakening rial.

The Peugeot Pars emerged as IKCO’s main model, which is used by the government, diplomats, and families alike. Originally designed as a facelift of the Peugeot 405, the vehicle incorporated design elements from the Peugeot 605 and 406 models. Iran Khodro introduced it following a decade of local Peugeot 405 production.

Since its privatisation, IKCO has redirected its manufacturing focus towards higher-margin vehicles, particularly the 15-year-old Peugeot 207 series, after removing the entire Pars family from production.

Iranian regulators approved a 30% price increase across the company's product range in November 2024, marking its first price adjustment in 18 months.

The regulatory approval followed extended negotiations with automotive sector policymakers. The restructuring initiative has significantly altered the company's product mix, with average unit prices rising 52% compared to the previous period.

"The removal of Peugeot Pars from our production line and realignment towards other models has shown clear results in our financial performance," the company spokesperson said to local media.

As part of the privatisation, the new board composition includes Ganjineh Iranian Investments, Behineh Sazan Bahman Company, Etebar Afarin Company – all considered allies of Crouse – as well as the National Investment Management of Iran and Saba Energy, bnm IntelliNews earlier revealed.

Crouse, the largest auto part manufacturer in the country, started buying shares of major automakers via its affiliated companies in recent months. The move has been criticised by many observers, as automakers have repeatedly blamed part makers for the low quality of their products.

IKCO expanded its regional reach in recent years with joint venture deals with companies in countries including Iraq and Azerbaijan. The company also used to produce vehicles in Syria under Bashar al-Assad’s regime but has since discontinued operations in that market.

The shift to private sector management through Crouse Group has generally received positive reactions in the press. The move represents a significant change for Iran's largest automaker, which has struggled with losses, though its future performance under private management remains to be seen.

Cars produced by IKCO’s joint venture with Azerbaijan’s AzerMash – under the Khazar brand – are to be sold in Russia if all goes to plan. Khazar’s plant is in the Naftchala department of Azerbaijan, 168 kilometres south of Baku. In Azerbaijan, in the basic configuration, a Dena sedan costs AZN16,000 ($9,411).