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Automotive Industry

Fair - weather friends!

Iran resumed final nuclear talks with P۵ + ۱ in Vienna and there are positive signals on finalizing the text of comprehensive agreement on Iran’s nuclear energy program. During severe sanctions on Iran, disloyal carmakers left the country, but surmising the result of nuclear talks, they are going to come back to Iran’s market.

Iran resumed final nuclear talks with P5+1 in Vienna and there are positive signals on finalizing the text of comprehensive agreement on Iran's nuclear energy program. During severe sanctions on Iran, disloyal carmakers left the country, but surmising the result of nuclear talks, they are going to come back to Iran's market. First, there was some news about Peugeot's return to Iran market and now it is heard that Renault and Kia Motors are intended to restart their activities in Iran's market, though they left it in days of strict sanctions. As Reuters quoted by Jerome Stoll, chief performance officer of Renault, this company is looking for a joint venture to restart the activities in Iran's market. According to Reuters, Renault is quite willing to resume its activities in Iran and its managers consulted with France and US governments. Apparently, the financial situation of Renault in South American market has got worse and this caused serious worries for French carmakers to the extent that Renault Company is seeking new markets like Iran and Turkey. At the same time, Kia Motors resumed its activities with SAIPA Company. Considering attempts of Peugeot for returning to Iran's market, all of three fair weather friends of Iran are ready to restart their activities in the country. Although, Renault was a little more loyal to Iran and it continued production as far as possible. This company also left Iran when sanctions were tightened. It does not mean that French carmakers love Iranians, but it shows that investing in Iran and Middle East markets is very beneficial for Renault. This company did not leave Iran for early warnings from then Governments of French and the U.S.A.
At that time, French carmakers, known for their discipline and hardworking, persisted in staying in Iran, but having received harsh warnings in the form of threats, Renault could not stand any more. So, this French carmaker, like its compatriot Peugeot, left Iran and its neighboring markets. This made western countries pleased and Iranian partners of Renault unhappy. It was in early June 2013 that US government sanctioned Iran automotive industry in a sudden decision and it ordered companies including Renault to leave Iran's market.
US government also threatened that any relation or cooperation with Iran automotive industry means disobeying the order and it leads to punishments. Thereafter, Renault managers also acknowledged that the reason of leaving Iran was only for direct order of President Obama. Carlos Tavares, former senior Renault executive, also confessed on this matter in an interview with French newspaper Tribune. Beside threats, US government also lured French carmakers with promises. One of the great expectations of Renault Company is to enter the US market; knowing this, Americans assured French carmakers that their dream would come true. Therefore, Renault was motivated to leave Iran's market. At last, Renault suspended its activities in Iran having an Idea to come back someday.
Moreover, Renault faced with some problems with Iranian carmakers, most of which were about financial subjects. Fairly talking, Renault carmakers were confronted with many problems and sometimes they even could not receive their money because of banking sanctions against Iran. Even, as before, despite direct intervening of Americans in sanctions against Iran, Renault Company did not stop its activities because it has long term plans for investing in Iran. At that time, Renault Company intended to target Iran as the main station for export in the Middle East. However, America put pressure on this company to extent that these carmakers discontinued cooperating with Iranians.
The point was that Renault Company did not want to miss all international ties for staying in Iran. On the other hand, allure and threats from US government were of importance for Renault Company. Anyway, these carmakers left Iran and according to what they report later, Renault's interests waned after losing Iran's market.
Peugeot also experienced the same story. This company also decided to gave up working in Iran's market because of pressures by General Motors, the American carmaker which bought some shares of Peugeot. The difference was that Renault had some attachments in Iran and the company was unhappy to ignore its investments. Like Peugeot, it was not easy for Renault to lose the markets of Iran and Middle East.
There happened some problems for Iranian carmakers after Renault left Iran. This matter was not more annoying than Peugeot's story for Iranians but, they did not like to miss Renault as a reliable and professional partner. Renault was the only carmaker that invested in Iran and it affected part manufacturing industry in a positive way. Renault Company produced high quality devices and in general, Iranian carmakers were unhappy when this company stopped working in Iran. Now this fair-weather friend is intended to return to Iran's market and according to Reuters, this company is searching for a joint venture in the country.
Talking about South Korea and KIA Motors Company, one should say that is a company-now competing with top carmakers- famous for Pride among Iranians. Pride was the first car produced by KIA in Iran and now this small, low quality and cheap sedan is the king of the streets in Iran. In 1990s, KIA started its activities in Iran's automotive industry. At that time, Peykan was a beloved car with totality in Iran's market and that was a very big gap. For this, then officials of the ministry of industry decided to cooperate with KIA Motors and one of the cheapest products of this company was presented to Iran's market. People, who bought imported Prides in 1990s, accepted the good quality (comparing to current Prides) and this shows the relative satisfaction of this car at that time. Nevertheless, KIA Motors was not such interested in investing in Iran and, for this reason; it has no good supervision on the quantity and quality of produced Prides in Iran. So, the quality of this car started to suffer and now there are many censures for it. Nowadays, KIA Motors has no supervision and let SAIPA group use KIA's logo. SAIPA and KIA Motors cooperation continued until Rio entered Iran's market as a new product. Both companies signed a contract for this product but, despite having better quality, Rio could never compete with Pride in case of numbers. When Rio was presented to Iran's market, many believed it was a way to montage other products of KIA Motors. In practice, the production line of Rio stopped and there was no other substitute for it. At that time, SAIPA was going to produce Cerato, one of the expensive products of KIA Motors but, US government imposed more sanctions on Iran and KIA preferred to leave Iran so as to avoid America's reaction.
Now, having heard good news about nuclear talks between Iran and P5+1 and easing sanctions against automotive industry in Iran, KIA Motors is coming back to Iran and apparently the production line of Cerato is going to start in SAIPA.
We must wait to see whether or not the other fair-weather friends like Hyundai and Volkswagen would come back to Iran.

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