Renault may return to Iran if political situation eases

Article by Anita Panait, on August 7, 2013

Renault is aiming to return to Iran as soon as the political situation in the country eases, although its remains unclear when that will occur. Renault was forced to terminate shipments of knockdown kits to Iran, which it considers a key market, on July 1, 2013 after the United States government extended economic sanctions over the country's nuclear program to the auto sector.

Renault was one of few large European firms still doing business in the country. Renault sold 100,783 vehicles in Iran in 2012, making it the carmaker’s eighth largest global market in terms of sales, larger than Italy and Spain.

Likewise, Renault controlled 10 percent of the Iranian vehicle market in 2012. Thus, the loss of its business in Iran could prove to be a big blow for the French carmaker.  Renault, through Tehran-based partners Iran Khodro and Paris Khodro, also produces the Logan and Megane in Iran.

A spokesperson for Renault told Automotive News Europe that the French carmaker waiting for the economic sanctions to be lifted or the political situation to change before it resumes CKD shipments to Iran. Renault will wind down production of its vehicles in Iran when the kits already shipped to the country run out in the next few weeks.

The spokesperson, however, said that the production infrastructure used to build Renault cars in Iran will remain indefinitely. Renault was forced to write off the entire value of its Iran business, resulting to a EUR512-million ($680-million) charge against its second quarter earnings. No thanks to the economic sanctions against Iran, Renault's CKD to the country dropped 48 percent to 28,082 units in the first half of 2013.

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