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Renault Set To Expand Share Of Iranian Auto Market


IRAN -- Thierry Bollore (R), deputy director of Competitiveness at Renault, and Iranian Minister of Industry Mohammad Reza Nematzadeh attend a press conference following a signing of a deal ceremony in Tehran on August 7, 2017

Based on a highly confidential contract, French giant automaker, Renault, is planning to expand its presence in Iran, home to a potential market of 80 million people.

The $780 million joint venture contract was signed on August 7.

“We are not authorized to reveal the details of the contract, since [Iran’s] car manufacturing contracts are totally confidential,” Tasnim, a news agency close to the Islamic Revolutionary Guards Corps cited Industry Ministry deputy Mohsen Salehi Nia as saying.

It is not clear why car-making contracts are so confidential.

Renault holds 60 percent of shares in the new contract, while each of the Iranian parties holds 20 percent, Tasnim reported.

Earlier, the CEO of the the Industrial Development and Renovation Organization (IDRO) of Iran, Mansour Moazzami, had said the new contract would encompass car production in two phases, the second of which will start in 2019 and take three years. IDRO is a partner in the Renault deal.

The Renault expansion in Iran signals that Western companies are increasingly more confident about the nuclear agreement remaining in force, despite new sanctions imposed by the United States.

The New York Times reported that as a result of nuclear related sanctions having been lifted in 2016, IDRO has a free hand now to enter into deals with foreign companies.

In total, Renault plans to manufacture 300,000 cars in Iran annually, he said.

The first two models, the new Renault Duster and the Renault Symbol, will be manufactured in Iran by 2018.

Renault
Renault

Renault is the only French company that, despite international sanctions imposed on Tehran, never fully left Iran’s market.

Pro-Rouhani forces in Iran have praised the contract as another achievement of the government, which negotiated Iran’s nuclear deal with world powers, lifting crippling sanctions on Iran.

The conservatives who loudly protested a similarly confidential contract with France’s giant oil company, Total, have yet not reacted to Renault’s efforts to significantly expand its presence in Iran.

Renault has already signed deals with Iran Khodro and Pars Khodro, a subsidiary of Iran's second-largest automaker, SAIPA on cooperation in use of manufacturing plants and dealerships.

Meanwhile, Renault’s main competitor in Iran, France’s Peugeot-Citroen (PSA), is back on the Iranian market in full force. In 2016, PSA signed a $470 million deal with Iran Khodro and SAIPA to manufacture 200,000 Peugeots and 200,000 Citroens in Iran.

PSA, which quit the country after international sanctions hit in 2012, has been quick to rebuild its presence in Iran, which was the company's main engine of growth last year, Iran Student News Agency (ISNA) reported.

Overall production in Iran is expected to reach 2 million cars a year by 2020, up from 1.2 million in 2016, according to ISNA.

Renault’s new production line will be located in the city of Saveh, about 100 kilometers (62 miles) southwest of the capital, Tehran.

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