French car-maker PSA Peugeot Citroen will pay Iran over €400 million in compensation for losses after it quit the country due to sanctions, the managing director of the country’s largest carmaker said.

Peugeot, the biggest-selling European carmaker in pre-sanctions Iran, suspended sales in 2012 when an international boycott against Iran due to its nuclear programme was extended to the automobile sector. Most sanctions were lifted in January.

“Based on the deductions ...€427.6 million of compensation will be paid by Peugeot to Iran Khodro because of the losses,” Hashem Yekke-Zare, managing director of Iran-Khodro Company, was quoted by the ISNA news agency as saying.

Yekke-Zare said the compensation would be mostly in services and discounts, including auto parts for current models being produced in Iran and devices for Peugeot 207 models.

Peugeot had also written off €11 million of Iran Khodro debts plus €65 million in royalties owed between 2012 and 2016, he said, adding €317 million would be in the form of future co-operation, including training. Peugeot declined to comment on details of the deal but its spokesman told Reuters that “the deal signed with Iran is a good and balanced one”.

Last month, Peugeot and IKCO signed a joint-venture deal to produce latest-generation vehicles in Iran.

For Peugeot, the factory tie-up is important. When it suspended sales in Iran in 2012 it lost nearly 10 per cent of global deliveries and interrupted a relationship dating back more than 50 years.

Four million Peugeot cars are currently on the roads in Iran.