Despite sanctions, car companies work with Iran (JERUSALEM POST) By JOANNA PARASZCZUK 04/30/12)
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Foreign automakers are supporting the regime in Iran by offering
state-owned companies access to advanced technologies that are often
used for the Islamic Republicís military and security apparatus, a US-
based pressure group has warned.
United Against a Nuclear Iran (UANI), which this month ramped up its
campaign to get foreign automakers out of Iran, says that Fiat,
Isuzu, Kia, Mazda, Mitsubishi, Nissan, Peugeot, Renault, Suzuki,
Toyota and Volvo either export to the Islamic Republic or have
manufacturing agreements with car companies controlled by the regime.
Iranís domestic auto industry is the regimeís second most lucrative
after oil and gas, and has boomed over the past decade-and-a-half, as
the Islamic Republic deemed it a priority industry.
According to a report published this month by Business Monitor
International, the Iranian government has placed increased emphasis
on its auto business in an effort to create revenue in the wake of
increasing US and European sanctions.
European and Asian automakers, including Renault and Fiat, have a
large presence in the country, mostly through joint ventures with
state-owned Iranian companies, who manufacture vehicles under
license, usually by assembling imported ready made car parts.
However, UANI has accused foreign car manufacturers of aiding the
regime by partnering with the Islamic Republicís auto sector, by
providing an enormous source of revenue, including directly to
companies controlled by both the Revolutionary Guards and the Iranian
Development and Renovation Organization (IDRO), both of which are
sanctioned by the US and EU.
IDRO, the government body responsible for accelerating Iranís
industrialization, controls companies linked to Iranís nuclear and
missile programs including foreign procurement of technologies to aid
them, according to Swiss sanctions legislation
IDROís subsidiaries include the Iran Khodro Company, the largest
automaker in the Middle East that manufactures a range of foreign
vehicles under license via partnerships with several foreign auto
makers, including French automakers Renault and PSA Peugeot Citroen.
Via its joint venture with Khodro, Peugeot is the leading foreign car
brand produced and sold in Iran.
Last year, Peugeotís Iran exports accounted for around 13 percent of
its global deliveries, and according to Business Monitor
International, Khodro manufactured around 150,000 Peugeots in the
quarter ending March 20, 2012. UANI says that Khodro produced 510,167
Peugeot vehicles in 2010.
This month, however, Peugeot said the company is putting at least
part of its business with Iran on hold.
A PSA Peugeot Citroen union representative said the companyís
production of vehicle kits for shipment to Iran for assembly had been
frozen for at least five months, in the wake of international
However, UANI says it remains unclear whether Peugeot is still doing
business in Iran, and if so to what degree.
UANI spokesman Nathan Carleton told The Jerusalem Post that the
pressure group remains skeptical that Peugeot has terminated its
business in the Islamic Republic, pointing to a report in the
hardline ISNA news agency that Khodro intended to make 15,000 Peugeot
Pars sedans this year in its Fars factory.
In a recent report by Iranís state-run Press TV, a Khodro spokesman
said the company has yet to receive any official announcement from
Peugeot that their partnership has ended.
Although Peugeot appears to be reconsidering its business in Iran,
other foreign automakers are set to stay. UANI says that Italian auto
manufacturer Fiat and its subsidiary Iveco have so far ignored
requests to end their business with Iran.
Fiat has partnerships with Saipa, and Iveco has also licensed Iranian
commercial automaker Zamyad to produce some of its trucks and buses.
Like Khodro, both Zamyad and Saipa are controlled by IDRO.
ďThe [Iveco] trucks have been used by the Iranian regime to transport
ballistic missiles and stage gruesome public executions,Ē Carleton
According to Carleton, Fiat is also planning to expand its consumer
marketshare in Iran this year by opening a luxury Maserati dealership
European car companies are not the only ones to do business in Iran.
Japanese automaker Mazda has a partnership with the Bahman Group,
which produced over 36,000 cars in 2010. According to Iranís Mehr
News agency, Bahman is controlled by the Revolutionary Guards, who
own 45.5% of its shares.
UANI has developed model legislation, dubbed the DRIVE Act, requiring
automakers to certify they are not engaged in business in Iran to be
eligible for US government contracts. It hopes the campaign will
pressure foreign car manufacturers to withdraw from Iran by
increasing their concern about public reaction and opinion.
Although some foreign automakers have ignored requests to end their
business in Iran, UANI says that after it stepped up its auto
campaign this month, some car manufacturers have responded positively.
Earlier this month, Hyundai said it had left Iran, where according to
UANI it had extensive operations.
More recently, luxury car brand Porsche also said it had decided to
cease its business with the Islamic Republic.
According to a report this weekend by the Revolutionary Guards-run
Mashregh News, however, Porscheís Tehran representative has denied
the company plans to leave the Islamic Republic.
Citing official customs statistics, Mashregh says that during the
last Iranian year (ending March 2012), Iranians imported 563 Porsche
vehicles at a total cost of $49.8 million.
Carleton said the announcements from Hyundai and Porsche
are ďsignificant victories.Ē
However, Mashregh brushed off Porscheís announcement, saying that any
decision by the luxury automaker to cease its business with Iran
would have ďno effect on Iranís auto market,Ē as the Islamic
Republicís imported luxury car market is very small compared with the
market for domestically produced automobiles.
Sanctions have caused the Iranian Rial to deprecate significantly,
pushing the price of foreign car imports out of reach of increasing
numbers of Iranian consumers.
Last month, Bloomberg reported that Iranian dealers stocking foreign
automobiles have started to see a downturn in sales, an indication
that demand for European and Asian cars in Iran is plummeting.
A Persian-language report in the state-run ISNA news agency last week
said that Iranís car imports and exports had slumped in the last
According to an Economist report this month, Iranian domestic car
sales are expected to slump by a further 10% in 2012, as foreign
imports continue to shrink even more.
However, as sanctions make it hard for Iranians to buy foreign
imported cars, the Islamic Republicís domestic car industry may yet
get a boost Ė particularly in the wake of a call by Supreme Leader
Ayatollah Ali Khamenei for Iranians to support the economy by buying
In his speech to Iranians at Nowruz last month, Khameini said the key
to beating sanctions was increased domestic production.
Meanwhile, Iranís state media continues to downplay the impact on
Khodro of any decision by Peugeot to cease its business with the
Islamic Republic, with a recent Press TV report saying the company
was aiming to export to South America, Eastern Europe and Iraq this
year. (© 1995-2011, The Jerusalem Post 04/30/12)
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