Renault resumes Iran shipments for car production

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BOULOGNE-BILLANCOURT, France (Reuters) -- Renault has resumed shipments to Iran and expects its car production in the country to pick up progressively throughout the first half of 2014, the French automaker said.

A temporary easing of sanctions has begun to allow a "very low" volume of parts shipments for vehicle assembly in Iran, Renault's regional boss Gilles Normand said on Tuesday.

"The important thing is that we can gradually restart the supply of parts for vehicle production as well as the flow of payments," said Normand, head of the carmaker's Asia-Pacific operations, which include the Middle East.

"There's a window of opportunity for the next six months."

Overland shipments of parts for the Tondar model, an Iranian version of Renault's low-cost Dacia Logan car, have been leaving from Romania in the last 10 days after a six-month hiatus caused by last year's further tightening of sanctions.

Last week, Renault CEO Carlos Ghosn predicted that the Iran's auto market is poised to grow by at least 50 percent when sanctions against the country are lifted. Talking at the World Economic Forum in Davos, Ghosn said that the current market, which sells 700,000 to 800,000 cars a year, could jump to "anywhere between 1 million to 1.5 million cars."

Renault stopped selling component kits for assembly in Iran last year, in line with trade sanctions.

Renault's global sales, including its Dacia and Samsung brands, rose 3 percent last year to 2.63 million cars and light commercial vehicles. Growth was held back marginally as the manufacturer stopped sales in Iran, which cost the company 64,500 deliveries versus 2012, Renault said on Jan. 21.

Iran's car industry

Production by Iran's car industry, unusually developed for the Middle East, peaked at 1.6 million cars in 2011, the year extensive new sanctions were introduced.

Renault and French rival PSA/Peugeot-Citroen are keen to resume Iranian vehicle assembly and sales with local partners Iran Khodro and Pars Khodro, to rebuild the significant market position they enjoyed before sanctions were tightened.

In return for Tehran's pledge to freeze key parts of its nuclear program, the so-called P5+1 powers agreed in November to a six-month lifting of sanctions on selected goods including car parts. The easing is only now beginning to take effect.

"If Iranian consumers see no change, they will think the country has been short-changed," Normand said.

"So I think it's understood that things must be allowed to improve visibly in Iran - and that's where the government will get a legitimate mandate to reach a [final] deal."

International talks are expected to begin next month in New York on a permanent deal to wind down sanctions in return for curbs on Iran's nuclear program.

Bloomberg contributed to this report

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