Mercedes-Benz Trucks signs contract with Iran Khodro

The logo of Iran-Khodro Company (IKCO) is seen on the carmaker's booth at the 2016 Moscow International Auto Salon in Moscow, Russia, August 26, 2016. REUTERS/Sergei Karpukhin

LONDON (Reuters) - Germany's Mercedes-Benz Trucks signed a contract on Tuesday with Tehran-based automaker Iran Khodro, parent company Daimler AG DAIGn.DE told Reuters, laying the foundation for resuming distribution of its trucks in Iran.

The deal between Iran Khodro and Mercedes-Benz Trucks includes creating a joint company that provides sales and after-sale services in the Islamic Republic, Iran’s semi-official Tasnim news agency reported.

According to Tasnim, a second deal would be also signed next month to create a joint venture in Iran for production of heavy vehicles including Actros trucks.

French PSA PEUP.PA -- the maker of Peugeots and Citroens -- and rival Renault RENA.PA have pushed hard into Iran since its 2015 deal with world powers that saw international sanctions lifted in return for curbs on Tehran's nuclear activities.

PSA has signed production deals worth 700 million euros ($768 million), while Renault has announced a new plant investment to increase its production capacity to 350,000 vehicles a year.

Germany's Volkswagen VOWG_p.DE and BMW BMWG.DE are among those that have put Iranian ambitions on hold as they are concerned that any deal with Tehran might affect their sales operations in the United States.

Reporting by Bozorgmehr Sharafedin in London and Edward Taylor in Frankfurt; Editing by Keith Weir