By: Maryam Azish

French auto giants keen on stronger presence in Iran

News ID: 3994627 -
TEHRAN, Jun. 10 (MNA) – The Iranian car manufacturers have managed to turn the threats posed by sanctions into the opportunities. Although some had predicted that the automobile industry in Iran would die after the sanctions, it did not.

The conditions after the 2015 nuclear deal known as the Joint Comprehensive Plan of Action (JCPOA) have created a tangible competitive atmosphere in the country.

Recently a large number of foreign companies have once again lined up to enter the country's 80-million-strong market, with the French car producer Peugeot and Renault as usual ranking at the vanguard of the queue.

Ahead of other interested European companies, who mull to begin a new round of visits to Tehran for holding negotiations with Iranian companies and ink contracts with them, the French ones have already stepped forward to start cooperation with their Iranian counterparts.

The two French auto giants have voiced their keenness to make investment in automobile lucrative business in the Islamic Republic of Iran.

Although following the signing of the nuclear deal a number of contracts were signed between Iran Khodro Company (IKCO) and Saipa Group from Iran and their French counterparts Peugeot and Renault, respectively, it appears that France's automobile industry does not regard these deals as sufficient, seeking to expand cooperation with Iranian auto manufacturers, Ifpnews wrote.

Iran Khodro Company cooperation with France’s Peugeot dates back to more than two decades ago and seven different Peugeot models accounted for about 64 percent of the total of 542,000 passenger cars and pickups produced by IKCO in 2007. IKCO and Iran’s second-largest car company, Saipa, produce Logan in a joint venture with France’s Renault.

The French auto maker's officials have expressed reluctance to witness the recurrence of the same experience they had in their former partnership with Iran and, thus, this time, intend to display greater sensitivity over issues such as controlling the quality of the cars as well as after-sales services to have a different presence in Iran.

Supply Chain

In Feb 2017, Iran's RISECO and MECAPLAST of France signed a joint venture in a situation that 30-percent exports condition will be implemented for a spare part contract.

Speaking in the ceremony to sign the contract, Chairman of RISECO Board of Directors Hamidreza Samadi said that MECAPLAST is one the biggest spare parts suppliers of France.

Samadi pointed to thirty-percent exports of products, saying this condition has been set by Iran’s request since 'our activities are not supposed to be restricted to Iran’s borders but beyond the borders'.

Iranian ambassador to France Ali Ahani also referred to producing highly standardized car parts in Iran as one the advantages of the recent contract.

In the meantime, The Chief Executive Officer (CEO) of MECAPLAST Pierre Boulet pointed to the suitable and considerable infrastructures of Iran spare parts industry, saying that during the last years MECAPLAST products were exported to Iran through establishing cooperation with Renault and Peugeot.

“After lifting sanctions and the implementation of Iran nuclear deal also known as the Joint Comprehensive Plan of Action (JCPOA), we are trying to make Iran as one of MECAPLAST’s exports hub,” he said.

Long-Lasting Ties

On Jan 2017, French Foreign Minister Jean-Marc Ayrault  in a conference in Tehran which he was attending in accompany of his Iranian counterpart Zarif said respecting the JCPOA has been of high importance for France and it has been committed to defend it.

 “France has been committed to defend JCPOA,” Ayrault said adding that his country was among the first ones to re-establish ties with Iran after the deal.

He continued “bilateral ties particularly in field of economy is beneficiary for both Paris and Tehran and France has never acted so fast in working with any other country.”

Elsewhere in his speech, French official underlined that Paris is seeking long-lasting ties with Tehran in energy and transport sectors.

Ayrault also noted Iran’s “well-known higher education” and expressed France’ will to expand academic ties further while recalling that 17 MoUs have been signed before in this regard.

“Peugeot and Renault have resumed their activities in Iran and the first Airbus has been delivered; Total also has sealed oil purchase deal with Iran; I hope all other contracts get into action as fast,” he said.

Ayrault reaffirmed the bright future of Tehran-Paris ties and urged both sides to try the best to ease the financial issues; “France has been active in issuing export guarantees for Iran and this is an indication of trust we have in Iran; Iran also has to remove its financial obstacles for foreign investors to enter the market.”

Strategic Agreement

In September 2017, the Industrial Development & Renovation Organization of Iran (IDRO) and Renault have signed a strategic agreement in Paris to create a new joint venture.

The agreement which would allow Renault to strengthen its presence and accelerate its growth in Iran, was signed on the sidelines of the Paris Motor Show between Mohammad Reza Nematzadeh, Iranian Minister of Industry, Mine and Trade, and Carlos Ghosn, Chairman and CEO of Renault.

The French automotive group will be the majority shareholder. In 2015, Renault sales to Iran increased by 56.1% over 2014 to a total of 51,500 vehicles and a market share of 4.8%.

The first vehicles to be produced in the plant will be the Symbol and the Duster, beginning in 2018.

"With 2 million vehicles planned for 2020, the potential of the Iranian car market is undeniable. This agreement confirms our strategic choices made in Iran and opens a new era allowing Renault to hold a privileged position in the country,” said the CEO of Renault.

The joint venture will, on the one hand, include an engineering and purchasing center which will support the local suppliers, as well as a plant with an initial production capacity of 150,000 vehicles a year, which will be added to Renault’s current capacity of 200,000 vehicles.

Under the agreement, the group will, for the very first time, develop its own distribution network with sales and after-sales services in line with Renault brand standards.

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