Renault prepares to resume export of cars to Iran

Renault will soon reopen trade communication with Iran in regards to exporting vehicles. A preliminary agreement last month between Iran and six world powers in Geneva allows for the lifting of some sanctions on the auto industry. Renault and French rival PSA/Peugeot Citroen until recently shipped semi-built cars to Iran as component kits for assembly by local partners Iran Khodro and SAIPA. PSA’s 458,000 sales amounted to a 29 percent market share at the 2011 peak, while Renault claimed 6 percent of national registrations. Renault stopped the export of car parts in June. PSA halted shipments in February 2012 after entering an alliance with General Motors. PSA is also considering returning to Iran as France’s two automakers bid to reclaim their market position. Iran’s domestic car industry is unusually developed for the Middle East and production peaked at 1.6 million cars in 2011. Iran has the potential to be a profitable, fast-growing auto market quickly exceeding the sale of 2 million vehicles annually, analysts say. Iran has been under a series of international financial, energy and trade sanctions that are meant to pressure it to curb its nuclear program. However, such sanctions have totally cut Iran off from the rest of the world, limiting their imports and exports, especially those of luxury goods. Iran denies it seeks to build nuclear weapons. In return for efforts 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. U.S. auto manufacturers remain barred from Iran by domestic rules including a trade embargo that does not look like it will be lifted anytime soon. With a volume of 100,783 vehicles sold in the country last year, Iran was Renault’s eighth-biggest global market in sales. On July 26, Renault was forced to write off the entire value of its Iran operations because of the sanctions, leading to a 512 million euro charge against its second-quarter earnings. When, sometime in the future, all of the sanctions and the embargo against Iran are lifted, all of the sources available point to a rapid growth of the auto industry.