IDRO Resolves Problem With SAIPA Over Renault Deal

Renault’s production deal with the Industrial Development and Renovation Organization and a local private company Negin Khodro will become operational by March, the IDRO chief said.

“The trilateral deal will be implemented in two months,” Mansour Moazemi told ISNA at the weekend.

French carmaker Renault signed a €660-million production deal with IDRO and Negin Khodro last August according to which IDRO should handover a factory in Saveh, 100km southwest of Tehran, to Renault.

Moazemi says, “The deal has been delayed because IDRO could not meet its contractual obligation. As per the deal we agreed to handover the Bonro production site in the city of Saveh to the French company. But we have not been able to do so.”

The Bonro production plant is owned by SAIPA and the transfer of its ownership rights to Renault has been a bone of contention between IDRO and SAIPA. The latter under its former director Mehdi Jamali insisted that IDRO had no legal claim to the production site.

IDRO is the main shareholder in SAIPA and the automotive company’s CEO, as a rule, is appointed by the IDRO director. Furthermore, according to Moazemi, SAIPA owes 8 trillion rials ($2.3 billion) to IDRO and the organization has promised to forfeit the debt in return for Bonro ownership.

However, SAIPA under Jamali did not comply with IDRO’s proposal. It has been speculated in the local media that the resistance was due to SAIPA’s reluctance to let a new and powerful auto giant enter the car production industry in Iran.

In Nov. 2017 IDRO fired Jamali and replaced him with Mohsen Jahrodi as SAIPA boss. Two months later in January Jahrodi said, “Regarding the Bonro production plant, SAIPA will do as IDRO wants. Whatever decision the organization makes SAIPA will comply.”

Moazemi said on Saturday, “IDRO is following up the matter and will come to a conclusion soon.”

Informed sources with IDRO have told the Persian-language newspaper Donya-e-Eqtesad that SAIPA and IDRO have reached an agreement over the matter and the production facility will be handed to Renault soon. They spoke on the condition that they not be identified.

 Renault Foothold

Renault has a majority 60% stake in the new joint venture, while Negin Khodro and IDRO each have 20%.

According to Moazemi, €660 million will be invested in the joint production that will create jobs for 3,000 people. Initially 150,000 cars will be produced under the JV in the coming fiscal that starts in March and production capacity will be increased to 300,000 units over time.

Three Renault models, namely Kwid, Duster, and Symbol are to be produced in Iran under the deal. It is reported that the first Kwids should be in the market later this year.

The French carmaker has also agreed to train local suppliers and provides them with technology for producing parts that can meet the company’s standards. Renault has already started the training process.

The company is also set to open an engineering center in Iran as it expands its footprint in the large domestic car market.

Two Renault models, Logan and Sandero, are produced/assembled in Iran by local carmakers Iran Khodro and Pars Khodro. During the nine months to Dec. 21, more than 116,000 Renault cars were produced.

In addition to domestic production, several Renault models are offered by Negin Khodro in the local market through Imports.

The French company has reported that it sold 162,079 vehicles in Iran in 2017, which accounts for 79.7% vehicles sold by the auto giant in the Middle East. It total global sales was reported at 2.6 million.