Page 47 - IRANRptSep18

PSA Group employees have gradually left Iran since US President Donald Trump in early May announced he was launching a new economic sanctions campaign against the country. Peugeot lately announced it was cutting direct ties with IKCO. Prior to that, PSA Group’s Citroen reversed out of its deal with SAIPA, citing production issues. The group’s third brand with a presence in Iran, DS, which relies entirely on imports, is the only PSA brand still selling in Iran. Salehinia pointed to Peugeot’s refusal to work with Iran under the new wave of US sanctions, saying the French company must pay the penalty for cancelling its contract. Peugeot must also fulfil its commitment to supply Iran with Peugeot 2008 components and provide after-sale services since vehicles have been presold in Iran, he added.
Meanwhile, auto officials in the country have said they intend to use the Peugeot 2008 as the basis of an indigenous car. It is not known whether the vehicle will be produced by Peugeot remotely or with Chinese brand DongFeng, which currently produces one model with IKCO in Iran. DongFeng is also partially owned by PSA Group and makes use of several body parts used by PSA in its cars.
German auto giant Daimler halted its business activities in Iran just hours after US President Donald Trump pledged to stop any company operating in Iran from selling goods in the US. "We have suspended our already limited activities in Iran in accordance with the applicable sanctions," a Daimler spokeswoman said on August 7. Daimler had been teaming up with two Iranian firms to assemble Mercedes-Benz trucks.
The decision by Daimler came despite efforts by the European Union to persuade European companies to persist with trade and investment in Iran regardless of the sanctions squeeze.
Chinese and other East Asian automakers assembling vehicles in Iran have slowed or ceased sales because of the stark devaluation of the Iranian rial (IRR) by more than 100% since early April to weaker than 80,000 to the dollar, several industry insiders have disclosed.
Such manufacturers previously saw Iran as a cash cow for their vehicles as the market is heavily controlled by government pricing. Foreign players, including Beijing-based companies, were at times able to charge twice for their cars as they would in mainland China. China has come to regard Iran, home to 80mn people, as its next best near-home auto market. Several Chinese companies had a substantial presence at the 2018 Tehran Auto Show. The Chinese auto firms outnumbered European companies seven to one.
However, their relationship with the Iranian market has grown rather strained. According to one report on social media, a local company representing a Chinese firm which sells 4x4 Haval-branded vehicles had its showroom trashed by angry customers after taking 100%-deposits for cars that never arrived in the country.
Another report said that Kerman Motors, which sells JAC and Hyundai models, reportedly told customers that they were no longer eligible for Hyundai cars due to the continuing devaluation of the rial and instead offered a Chinese JAC SUV model. Customers reportedly stormed the showroom demanding their money back, citing weeks of delays in obtaining their vehicles. The company responded by offering IRR150mn in addition to the Chinese JAC.
South Korea’s Hyundai announced some weeks back that it was intending to leave the Iranian market due to US pressure. The company previously signed up to produce several low-cost Hyundai models in Iran.
47 IRAN Country Report September 2018 www.intellinews.com