Peugeot faces snub for return to Iran

Reporting "Asre Khodro", Iran is furious at the French car maker for withdrawing from the country under US pressures which, according to the managing director of Iran Khodro, idled a large production line in 2012.

“After the sanctions, Peugeot left the Iranian market in an unwise and ungracious move, leading to the layoff of more than 8,000 workers only in France,” Hashem Yekke-Zare said.

“Hence, Peugeot must know that it has to account for its past behavior. Moreover, at least for the time being, it must not rest assured that an agreement prepared for cooperation will be definitely signed and if it is signed, the company will not be our main partner.”

Yekke-Zare said several companies have indicated their interest in cooperation, but Iran will take its national interests into account and choose a partner which is strong and committed to its obligations.

Peugeot was lured into leaving Iran by General Motors with promises of a share in its market which the Detroit-based company didn’t live up to. The French automaker slammed the door in the face of Iran Khodro, its second biggest market by volume, after 23 years of partnership.

Yekke-Zare indicated that Renault could replace Peugeot as Iran Khodro’s main partner. He said his company has been in direct negotiations with Renault since a year ago for production of supermini Clio 4 and mini-crossover Captur and Kwid cars.

“Kwid is a relatively low-cost car which could be a match to Pride (supercompacts in Iran), with plans to produce 150,000 units a year,” Yekke-Zare said.

Renault introduced its first-generation no-frills Logan sedans to Iran to produce 500,000 units a year but sales have dwindled under sanctions.

Yekke-Zare said the car maker has produced 400,000 units so far at maximum, adding supplies of the model, called Tondar in Iran, will continue until the end of the current Iranian year in March 2016.

Renault has $562 million of funds stuck in Iranian banks under the sanctions. The company is reported to be weighing purchase of stakes or manufacturing plants in Iran.

On Wednesday, French Foreign Minister Laurent Fabius arrived in Tehran to "revive relations" following the landmark conclusion of nuclear talks. France's main business lobby group, the Medef, is also sending a delegation of about 80 firms to Iran at the end of September.

The sanctions mostly benefited Chinese automakers which moved in to fill the void, but Yekke-Zare said they would face a hard time with the return of big international companies.

“The Chinese used the opportunity to enter the Iranian market but their products cannot compete with European cars in terms of quality and technical features.”

The official said Chinese automakers control only five percent of the Iranian market at maximum but they have to review the quality and prices of their products in order to stay.

“At present, there is a saying in the market that if you buy a Chinese car, you will be its first and last owner,” Yekke-Zare said.