European car-makers’ future in Iran after re-imposition of US sanctions
European car-makers’ future in Iran after re-imposition of US sanctions

Despite US pullout from Joint Comprehensive Plan of Action (JCPOA), some foreign car manufacturing companies have determined to leave Iranian market but most of them especially European car manufacturers still insisting on continuing their cooperation with the Islamic Republic of Iran. Car manufacturing companies are different from other foreign companies in this respect. When foreign […]

Despite US pullout from Joint Comprehensive Plan of Action (JCPOA), some foreign car manufacturing companies have determined to leave Iranian market but most of them especially European car manufacturers still insisting on continuing their cooperation with the Islamic Republic of Iran.

Car manufacturing companies are different from other foreign companies in this respect. When foreign car manufacturing companies rushed to Iranian car market after the implementation of Joint Comprehensive Plan of Action (JCPOA), the official title of nuclear deal, in mid-July 2015, many of these foreign companies lodged their complaint that they incurred losses in sanctions period. For their parts, Iranian car manufactures also complained foreign counterparts in return which cause low quality cars provided for Iranian people.

Under the current circumstances, leading French car manufacturing companies including ‘Peugeot’, ‘Citroen’ and ‘Renault’ announced their readiness that they have been given a go ahead to continue cooperation with the Islamic Republic of Iran after US withdrawal from JCPOA.

Accordingly, domestic and foreign automakers made up their mind to ink new round of cooperation agreements with Iranian counterparts which would have the least impact in case of re-imposition of US sanctions against Iran.

‘Peugeot’ to manufacture new cars with Iran as Joint Venture

France’s ‘Peugeot’ Company signed joint cooperation contract with Iran Khodro Industrial Group (IKCO) in order to get the lion’s share of Iranian car market. Under the contract, IKAP (A joint venture contract set up between Peugeot Company and IKCO.) Following the contract, the two sides deposited the amount of 450 billion rials for setting up the said joint venture company in equal condition. IKAP produced 2008 Peugeot as first joint venture contract inked between Peugeot Company and IKCO. When hit the Iranian car market, Peugeot 2008 was highly highly welcomed by Iranian people. Following the US pullout from JCPOA, it is more likely that France’s Peugeot Company will move from Iran’s car market but IKAP Sales and Marketing Manager said, “the company has made all its utmost effort to indigenize production of products under the contract inked between Iran and France in this regard. Once domestication of products is increased, expansion of sanctions will not bar activities anymore. Therefore, new cars can hit the Iranian car market.”

Since France’s Peugeot Company has invested heavily in Iran, it cannot leave Iran like previous years, an expert official in charge in IKCO maintained.

He is of the opinion that Peugeot Company will remain in Iran. Peugeot Company will incur severe economic loss if it cut off cooperation with IKCO.

‘Citroen to manufacture car in Iran

France’s Citroen Company also is determined to continue its cooperation with Iran. for this purpose, France’s Citroen Company inked contract with SAIPA Car Making Company. The jointly produced car between SAIPA and Citroen Company will hit the Iranian car market in very near future. Since this leading car manufacturing company in France has not any joint interests with the US, it [Citroen] will remain in Iran’s lucrative car market. A senior official in SAIPA Auto Manufacturing Company believes that Citroen will increase its level of interactions and cooperation with the Islamic Republic of Iran in future.

‘Renault places conditions on car production in Iran

Senior managers of France’s Renault Company in Tehran say that this prestigious French Car Mfg. Company will produce car in Tehran like previous years but CEOs of this company delay start of cooperation in joint production of car with SAIPA for fear of being punished by US government.

An informed source said that France’s Citroen Company intends to ink another cooperation agreement with Industrial Development and Renovation Organization of Iran (IDRO) with new terms and conditions.