35830
French Carmakers Scale Up  Joint Ventures in Iran
Auto

French Carmakers Scale Up Joint Ventures in Iran

Carmakers PSA Peugeot-Citroen and Renault-Nissan, both of which already have a presence in Iran, announced joint ventures last week, during Iranian President Hassan Rouhani’s visit to France.
PSA is focused on regaining its formerly strong position in the market. However, Renault is in a better position, having not stopped production with its partners during the sanctions that were put in place in 2012.
The French carmakers, along with their local partners in Iran, have their work cut out for them. The domestic car industry has been left in a “devastated position”, according to market analyst IHS Automotive.
Several automotive original equipment manufacturers were left bankrupt at the height of sanctions in 2013.
“The government tried to bail out its major local OEMs, SAIPA and IKCO [Iran Khodro], which both needed liquidity, and therefore sold several assets and shares,” said IHS analysts Stephanie Vigier and Michel Jacinto.
“Several suppliers also went bankrupt [and] jobless rate tripled within two years.”

  PSA to Make Up Lost Ground
Within a week of the removal of sanctions on Jan. 16, PSA Peugeot-Citroen announced a 50/50 joint-venture deal with Iran Khodro, the country’s biggest vehicle maker, which will come into effect by mid-year.
The venture is expected to invest up to €400million ($434.6million) over the next five years in manufacturing and R&D capacity for local production of the Peugeot 208, 2008 and 301 models, according to PSA.
Working together, the companies will develop a plant in the capital Tehran that will produce both PSA and Iran Khodro brand vehicles. The first vehicles will roll off the production line in the second half of 2017 and the company said it will rapidly reach an annual capacity of 200,000 units.
The carmaker said it aimed to hit sales of 1million by 2025.
PSA’s enthusiasm is understandable, given the ground it has lost since the embargo. Though its production continued after the embargo because of the feed of parts through the supply chain, it actually pulled out of Iran at the highest point of sanctions.
Parts and components were delivered from Turkey and China, according to Vigier and Jacinto.
Therefore, while PSA had left the country and did not have direct ties with Iran, its joint venture models continued to be produced.
However, in France, the end of parts and kit exports to Iran had a drastic impact on plants and labor, according to analysts. There were several layoffs and line closures, along with the fact that less money was earned by PSA and its suppliers.
“PSA’s success has been based on the quite accessible Peugeot 405, Peugeot Pars and Peugeot 206 models,” said Vigier and Jacinto. “The first two will end production soon, while they will clear up stocks on the local market, [but] this could take up to two years.”
The new models the company intends to produce, including the Peugeot 301, 208 and 2008, will be more expensive than the previous models.
Add to this, PSA will have to contend with more competitors in the new market configuration. These include Chinese OEMs, including Chery, Lifan, Great Wall, Geely and Jianghuai, which have been the main beneficiaries of their early investments in local production and from certain imports.
While Chinese brands do suffer from a bad quality image because of counterfeit parts and the copying of EU-produced vehicles, their low prices make their offerings attractive, said IHS’s analysts.
“We do not expect PSA to recover past shares in Iran both in terms of production and sales,” they concluded.
Despite this pessimistic view, Peugeot currently estimates the number of its cars on Iranian roads to be more than 4million.
In a statement, PSA said the latest agreement would restore contractual relations for the manufacture of Peugeot-branded vehicles there. It also stated that the agreement would cover the capacity to export joint venture products across the region.
A spokesperson for PSA said its export plan for the wider Middle East and North Africa region would depend on each country’s specific regulations and logistical costs.
“This strategic agreement turns the page on the period of international sanctions and enables PSA and Iran Khodro to start a new chapter in their 30-year history of cooperation,” said Carlos Tavares, chairman of PSA Peugeot-Citroen’s management board.
“Our shared ambition is to offer our loyal customers high-tech products to deliver mobility that meets the highest comfort, safety and environmental standards.”
The agreement includes technology transfers and significant levels of local content.

  Renault to Intensify Operations
Renault has also revealed plans to step up cooperation with Iran Khodro along with its other partner in Iran, SAIPA.
Last year, the carmaker produced two new vehicles with its partners: the Logan pickup (sold as Tondar) with Iran Khodro, and Sandero with SAIPA.
The company said as soon as smooth relations had resumed between French and Iranian banks, it would intensify operations and prepare future model releases in association with its two local partners.
“With a market amounting to 2million vehicles by 2020, Iran has undeniable potential,” said Bernard Cambier, director of the Africa-Middle East-India region.
“Renault has ambitious plans in Iran and advanced discussions are currently underway with SAIPA and Iran Khodro to step up our presence, develop our structures and support the automobile sector in Iran.”
Since 2003, Renault and its partners in Iran have produced close to 500,000 vehicles. The carmaker had a different deal with IKCO on the production of Tondar and, according to IHS, this meant it was not as badly affected during the sanctions period and during 2014-15.
“The brand is well perceived because the recent success of its models [those are mainly based on Dacia's recent offerings] in many world wide markets,” said the analysts. “Authorities and consumers appreciate that the brand did not leave Iran even during the embargo.”
Renault-Nissan’s product portfolio appears quite large and well adapted to Iranian demand. It offers the Renault Tondar (Logan), Sandero, and Tondar pickup, and will launch the Tondar SUV (Duster) and possibly the Renault Kwid as entry-level models.
It also has in its portfolio some more valued models such as the Renault Safrane, Talisman, Megane, Clio and Captur.
Tondar and Sandero are already produced in Iran, while the Clio is soon to be launched.
According to HIS, it will be followed by Captur and Kwid. Sandero has been available with a CNG engine in Europe and could be strong in Iran, too.
Nissan could also improve sales, as it is perceived as an expert of SUVs and pickups; the Nissan Tiida is already scheduled to be built locally. Several SUV models might be imported and more Nissan models could be built in Iran.

Short URL : https://goo.gl/F95qrp
  1. https://goo.gl/69TE7n
  • https://goo.gl/X2KPlg
  • https://goo.gl/soI9sS
  • https://goo.gl/Qy1Hmg
  • https://goo.gl/yAALSn

You can also read ...

The price of foreign cars is likely to jump again with new import guidelines.
Ministry of Industries, Mining and Trade has stopped issuing...
Peugeot’s 301 model is on sale in Turkey for more than three years.
Iran Khodro dealers confirm that the new Peugeot 301 sedan is...
IKCO Launches Taxi Made in China
Iran Khodro has unveiled the DongFeng S30 as part of a push to...
Opel Launches New Mall Sales Strategy in Stuttgart
Opel is piloting a new retail format that offers German...
Kerman Motor Offering Discount  on JAC S3
China’s JAC S3 small sports utility vehicle is on sale in Iran...
Haval Delivered With Delay
Chinese SUV brand Haval, which was supposed to enter the...

Trending

Googleplus