French automakers beat U.S. rivals back to Iran
Sanctions have barely been eased on Iran and the Detroit 3 are being beaten back to the market by French rivals. It's not surprising: Washington still keeps U.S. businesses and individuals shackled by stricter trade restrictions.
Chalk it up as a case of geopolitical stalemate handicapping U.S. automakers in an age where winning emerging markets – or in this case, re-emerging markets – is the name of the game.
A U.S.-led coalition of countries agreed in November to relax restrictions against Iran in exchange for concessions on its disputed nuclear program. Parts of that agreement took effect last month, including temporary relief of auto sanctions.
It wasn't long before France's Renault was resuming shipments to Iran. By the end of the month, Renault was sending parts for the Tondar, the Iranian version of its low-cost Dacia Logan, from Romania, Reuters reported. Renault had stopped shipping knockdown kits the previous year because of sanctions.
But Renault-Nissan CEO Carlos Ghosn sees big potential.
If sanctions are fully lifted, domestic Iranian auto sales could surge by at least 50 percent, he told reporters at the World Economic Forum in Davos. Market volume could grow from today's level around 800,000 vehicles to as high as 1.5 million units, he was quoted as saying by Reuters.
And Renault's apparently not alone in its assessment.
Carmakers from Germany, Japan and South Korea are also sending out feelers about work with one of Iran's biggest automakers, Iran Khodro Co., President Hashem Yekehzareh told Iran's Fars News Agency. He aims for tie-ups with Renault and PSA/Peugeot-Citroen.
Last week, a French business delegation representing 116 companies – including Renault and PSA – reportedly toured Iran, scouring early leads on business deals.
The rewards won't be huge, because Iran's market is small.
But the country was still the world's 18th largest car and truck producer in 2012, and sales could be set to boom.
Sales slumped in 2012 to 860,000 vehicles as harder sanctions and misguided domestic economic policies bit. But they were above 1 million units for four straight years before that.
What's more, by some estimates, more than half the vehicles on the road are over 25 years old, prime for replacement.
The United States has an especially complicated past that must be considered in normalizing trade relations, along with Iran's suspected ambitions to build a nuclear arsenal.
But the longer U.S. carmakers have their hands tied, the farther they will fall behind rivals in that promising market.
You can reach Hans Greimel at email@example.com. -- Follow Hans on