Asre Khodro: Iran has given priority to cooperation with German and Italian carmakers rather than to the French Peugeot.
Reporting "Asre Khodro", Iranian media reported that the country has suspended plans to cooperate with Peugeot and is instead preparing to take up talks with German and Italian auto majors to encourage them to invest in its car industry.
“Previously, everyone was expecting the signing of a cooperation agreement between Iran Khodro and Peugeot in light of the July nuclear breakthrough between Iran and the P5+1 group of countries,” wrote the Persian-language newspaper Donya-ye Eqtesad.
The daily added that however, it appears that Iran is already engaged in talks with more attractive partners.
Representatives from the French automobile industry were also striving to restore their previous share in the Iranian auto market.
French Peugeot wants to establish a 50-50 joint venture with Iran to produce cars. Iranian officials said the French auto giant is already in advanced stages of talks to provide automobile parts to the leading Iranian carmaker, Iran Khodro.
Speculation that Iran Khodro is preparing to sign a deal with Peugeot to launch a new joint venture in the country emerged in May. It had been reported then that serious talks to the same effect had taken place between the two sides in Paris.
Before sanctions, Peugeot held 22 percent of Iran's car market, but withdrawal from Iran caused huge losses for the company.
The French car manufacturer became the target of criticism in Tehran over its 2012 decision to withdraw its investments under U.S. pressure over disputes on Iran’s nuclear energy program.
“Iran Khodro had finalized its talks with Peugeot before March and was preparing to sign a JV deal with it upon the conclusion of nuclear talks between Iran and the P5+1,” wrote Donya-ye Eqtesad.
However, as the race has tightened for foreign automakers to access to Iran’s auto market, Iran Khodro suspended plans to team up with Peugeot and began talks with other companies including Germany’s Volkswagen, the daily added.
The daily noted this means that Peugeot is no longer a ‘key partner’ in the eyes of Iran Khodro leaders and they are now more inclined toward potential German and Italian partners.
German company Mercedes-Benz plans to purchase a 30 percent stake in Iranian Diesel Engine Manufacturing Company in order to produce automobiles in the city of Tabriz.
Iranian officials earlier said Volkswagen could become a reliable partner for Iran.
The automobile industry accounts for nearly 10 percent of Iran’s gross domestic product. The latest data shows that Iran ranks 18th on the list of the world’s top auto manufacturers. However, the country’s automotive industry needs modernization after years of sanctions.
Sanctions on Iran hit the automotive industry hard, slicing production by 1 million units from its peak of 1.6 million in 2011 and leading to 100,000 job redundancies.
Iran is one of the biggest producers of cars in the region.
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