Efforts by PSA Peugeot Citroen and Renault SA to boost sales outside Europe’s slumping car market stand to get a boost from a deal to lift sanctions on Iran.
The French carmakers sold more cars in the country than European competitors before tension over Iran’s nuclear program forced them to halt exports. Those sanctions will be eased after world powers struck a deal yesterday that called for $7 billion in temporary relief for the country.
“Peugeot and Renault are potentially the biggest beneficiaries among European carmakers, ” said Erich Hauser, a London-based automotive analyst with International Strategy & Investment Group. “But for the car industry to really recover financing for exports needs to be available, so sanctions in banking would have to ease as well.”
PSA and Renault have suffered more than most other European competitors as sales in their home region slide to a two-decade low. Eased sanctions on Iran come at particularly opportune time for Paris-based Peugeot, which vied with Korea’s Kia for the sales lead in the country. Peugeot is seeking to stem cash burn and boost sales outside Europe.
Peugeot, Europe’s second-largest carmaker, sold 458,000 vehicles in 2011 in Iran prior to the trade sanctions, making the country the automaker’s second-biggest market after France. Chief Financial Officer Jean-Baptiste de Chatillon said last year that the sanctions had cut 10 million euros ($13.5 million) a month from operating profit.
“Any indication that we could resume doing business with our partners in Iran goes in the right direction,” said Jean-Baptiste Thomas, a Peugeot spokesman. “We’ll see how we can do that the day sanctions are lifted.”
Peugeot shares rose as much as 5 % to 10.74 euros and were up 3.7 % at 11:00 a.m. in Paris. The stock has surged 93 % this year, valuing the company at 3.76 billion euros. Renault advanced as much as 2.2 % to 65.82 euros.