French car manufacturer Renault might have to leave the Iranian market altogether as a result of the US pullout from the nuclear deal with Iran.

Renault’s partner Nissan is a key player in the US market, and Renault may have its hesitations, fearing its activity in Iran might affect Nisan’s business in the United States.

In 2004 Renault was the biggest foreign investor in Iran’s automobile industry and held a 51 % of stake in Renault Pars that planned to market its platform X-90 family car in Iran.

However, as ultraconservative President Mahmoud Ahmadinejad came to power in 2005, Renault had to delay the launch of its Iranian project. Ahmadinejad called Renault’s deal with Iran “a colonial contract” and many of what Renault planned to do in Iran did not materialize.

Renault had invested some 500 million Euros in Iran and when Peugeot-Citroen left the Iranian market after the 2011 sanctions against Tehran, Renault remained in Iran but never managed to manufacture its planned 300,000 cars per year.

Nevertheless, while it announced in Europe that it had shut down its operations in Iran, it kept a presence in the troubled market and soldiered on.

After the nuclear deal with the west, also known as the Joint Comprehensive Plan of Action (JCPOA), while everyone in the market expected Renault to be the first auto manufacturer to sign a contract with Iran, Renault was hesitant.

Following its bad experience in joint ventures with two Iranian companies, Iran Khodro and SAIPA, Renault finally decided to work independently in the post- JCPOA Iranian market.

Prolonged negotiations with regulatory authorities led to yet another delay in Renault’s partnership with Iran. When Renault finally got the deal from Iran’s Industrial Development and Renovation Organization (IDRO) in August 2017, Peugeot -Citroen had already been manufacturing cars in Iran for over a year.

According to IDRO Chief Mansour Moazami, “Renault’s 660 million Euro contract called for manufacturing 150,000 cars to be marketed in early 2019.”

Moazami added that “Renault held 60% of the shares of the venture and was to manufacture two models of cars namely, New Duster and New Symbol.”

IDRO that held 40% of the shares, had promised to get back a factory from SAIPA and give it to Renault, but SAIPA wanted to rent out the factory to a Chinese company, and refused to hand it over to Renault and its government partner IDRO.

With the US withdrawal from the JCPOA, Renault might have to forget about investing in Iran and leave the Iranian market altogether fearing its presence in the Iranian market could harm its partners Nissan and Mitsubishi, which are key players in the US car market.

Many Renault cars use engines and gear boxes manufactured by Nissan while many Nissan and Mitsubishi cars use Renault’s platform parts.

European signatories to the JCPOA have vowed to protect European companies’ interests in Iran against US sanctions. However, several European officials have said that there is no guarantee such protection could work.