IDRO to Privatize 50% Share in Renault Deal

Renault’s new deal with IDRO is to be divvied up among private domestic carmakers
The Renault Duster is slated to be produced in Iran by 2018.
The Renault Duster is slated to be produced in Iran by 2018.
The Renault brand is the number one French brand with a global market share of 3.2%

Iran’s Industrial Development and Renovation Organization will hand half of its share in IDRO-Renault deal to Iran’s private sector over the next three years.

The announcement follows the deal between the French carmaker and IDRO on September 30.

According to earlier reports, Renault will be the majority shareholder with 60% share and have its own distribution network in Iran for the first time.

Critics believe that instead of state-owned IDRO, the deal with Renault should have been signed by the private sector.

On October 4, Eghtesad Online reported that Iran’s Deputy Minister of Industries, Mining and Trade and IDRO’s CEO Mansour Moazzemi said, “IDRO will hand half of its share to the private sector in three years.”

However, he did not name the Iranian private carmakers.

Some industry analysts claim the administration of President Hassan Rouhani is allowing state entities to ink such contracts to build its reputation for signing major deals before the next election.

Moazzemi also announced that Renault will invest $700-800 million in Iran through the deal.

Sasan Qorbani, organizer of Iran Automotive Industry International Conference, said bestowing a 60% share to the foreign company would ensure Renault’s commitment to the deal.

For instance, if Iran faces a new wave of sanctions, the foreign company would think twice before leaving Iran, as many did in 2006, since it would entail vast financial losses.

Qorbani added that the bigger share of the French company is likely to ensure Renault makes effort to sell the products to foreign markets.

Although none of the major Iranian carmakers has commented on the new deal, it seems that they find the IDRO-Renault contract promising since it will attract further foreign investment in the domestic car industry and boost competitiveness in the market.

Another reason could be that some government agencies claim the state duopoly Iran Khodro and SAIPA are private carmakers, which hope to ultimately grab the 50% share of the new deal.

And the transfer of shares will take place over three years to dilute any criticism over the deal.

The Renault brand is the number one French brand with a global market share of 3.2%. This would enable Iranian carmakers to link up with international automotive players.

Prior to the new deal, Renault imported completely built-up cars in Iran through Negin Khodro.

As part of the deal, two news cars, namely Duster and Symbol, will be produced in Iran 2018, according to a company statement. Financial details were not released.

Renault-Nissan CEO Carlos Ghosn said Iran could have demand for 2 million cars in 2020, making it a market with “undeniable potential”.


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