France’s carmakers are ready to reclaim Iran image

Renault and PSA are among Western firms that sent executives to an automotive conference that opened in Iran on Saturday – firing the starting gun on a more overt race for post-sanctions business.

The French carmakers are poised to resume vehicle sales in Iran, using a six-month easing of trade restrictions to reclaim their market position before the mass arrival of competitors behind any permanent detente that could follow.

Production by Iran’s domestic car industry, unusually developed for the Middle East, peaked at 1.6 million cars in 2011, the year crippling new sanctions were introduced. Leading manufacturer Iran Khodro accounted for about half of that output.

Khodro and No.2 manufacturer SAIPA have a handful of foreign production partners – including South Korea’s Kia, Suzuki and the two French manufacturers – and exported some of their vehicles.

The conference in Tehran, planned before last weekend’s Iran nuclear talks breakthrough, includes representatives of German, South Korean and Japanese manufacturers on its billing.

VW, Suzuki, Kia and affiliate Hyundai all denied Iranian media reports that they were to attend, but Renault and PSA Peugeot Citroen confirmed they were sending representatives.

In return for undertakings by Tehran to freeze key parts of its nuclear program, the so-called P5+1 powers agreed on November 24 to a six-month suspension of trade sanctions on selected goods including auto parts.

The easing, due to start by early January, is good news for the French, which until recently shipped semi-built cars to Iran as component “kits” for assembly by local partners Iran Khodro and SAIPA. U.S. carmakers meanwhile remain barred from Iran by domestic rules including a trade embargo that is not subject to any immediate relief.

Via Reuters