Economy, Business And Markets

Renault Sales to Iran Hits Monthly Low

Renault Sales to Iran Hits Monthly LowRenault Sales to Iran Hits Monthly Low

The French auto manufacturer Renault said its Iran sales in 2014 indicate a 16% decrease compared to 2013, despite the lifting of sanctions on car imports to Iran, reported Tasnim news agency on Friday.

The French automaker exported 34,182 vehicles to Iran during the first 11 months of 2013, while the figure stood at 28,780 during the same period this year. Although the interim nuclear deal between Iran and the five permanent members of the UN Security Council plus Germany, signed in November 2013, eased some restrictions on imports of cars and auto parts, the extension of sanctions, which include financial restrictions, has made it difficult for importers in Iran to directly deal with European carmakers.

According to Renault, the company’s exports to Iran in November this year reached 780 cars, about one third of October figures, recording the lowest monthly car sales to Iran in 2014.  

In 2012, the French automaker had sold 100,783 cars to Iran, while the figure was 93,626 vehicles in 2011. Renault’s most popular car in Iran is Dacia Logan, known here as L90, which is produced in Iran as completely knocked-down (CKD) kits by two major carmakers, Iran Khodro and Pars Khodro, which is a subsidiary of Iran’s second largest carmaker Saipa.

Because of the anti-Iran sanctions, imposed mainly by the western countries, many global automakers stopped the supply of auto parts or auto-industry-related raw materials to Iran. As a result, car imports from the United Arab Emirates doubled during the past two years, while domestic production experienced a dramatic 50% decrease.

The Rouhani administration has so far proposed different plans to help the domestic auto industry resolve the problems it is facing now, especially in the manufacturing of new cars. In September, the ministry of industry, mine, and trade proposed a plan based on which 50% of car import tariffs would be collected in a special fund to be used for low-interest loans to domestic automakers. Another solution offered by the minister of industry is to make car production process more economical by merging different car companies, reported MNA on Friday. Mohammadreza Nematzadeh said that “we should learn from the experiences of other countries and make the auto industry more efficient and competitive.”

He also urged closer cooperation between the car manufacturers and auto parts makers as a precondition for putting the auto industry back on track. The minister called joint ventures and export as necessary for boosting car production and stressed that Iran’s car exports would benefit from joint projects with foreign car companies, which will introduce new technologies to the sector.

Following the easing of sanctions, which had been imposed on Iran over its nuclear energy program, delegations from several carmakers from Asia, Europe and even the United Sates have visited Iran in the past eight months, holding negotiations with Iran Khodro and Saipa officials. Agreements have even been reached and the finalization of the contracts waits for a final nuclear deal, expected to be clinched by July 2015. Representatives of the American and European carmakers said they regard Iran as one of the most diverse economies in the Middle East, which can be far less dependent on oil revenues if it makes proper use of its huge industrial potentials.

As to the extent the car market is lucrative to foreign carmakers, Iran is the second most populous country in the Middle East after Egypt, boasting a demand base of 77 million people, more than twice the population of either Saudi Arabia or Iraq. Iran is the largest car manufacturing country across the entire Middle East, with the auto industry accounting for around 10% of the GDP. Iran produced a total of 630,639 cars in 2013, which showed a 25.6% decline compared to 2012 largely due to western sanctions imposed on Tehran over its nuclear energy program.    

Based on the 20-Year Vision Plan (ending in 2025), Iran should produce 3 million cars per annum, out of which one million should be exported.