By Benoît Faucon
TEHRAN--As talks over lifting sanctions on Iran drag on, Renault
SA is positioning itself for what executives hope will be a
reopening of one of the Middle East's biggest car markets.
The French auto maker recently resumed selling automotive
components to Iran, where they are used at a plant run by an
Iranian partner to assemble Renault-branded cars. Renault halted
those shipments amid Western sanctions specifically prohibiting
them, and amid tightened banking sanctions that made getting
payments out of Iran effectively impossible.
Renault executives are also considering investing in their
Iranian joint venture partner, Pars Khodro, should the West lift
sanctions, according to people familiar with the matter.
In early 2014, Western powers temporarily lifted some of the
sanctions they had slapped on Iran over decades--including some
related to commercial aviation, the automotive industry and
petrochemical activities. But Tehran hasn't yet reached a deal with
the West curtailing its nuclear program, pushing back any more
permanent sanctions relief. Banking restrictions that are still in
place have also made it difficult for Western companies to re-enter
Iran in a meaningful way despite the recent thaw.
Renault was recently able to resume shipping its parts, using
local money-exchange houses to legally repatriate payments,
according to people familiar with the matter. A Renault
spokesperson said "it is closely monitoring...ongoing negotiations
to be ready, if necessary, to resume a normal level of activity in
compliance with all applicable requirements."
Before the ban on car parts and bank transfers, Iran was
producing about 1.6 million cars a year. French rival PSA Peugeot
Citroën pulled out of its Iranian joint venture in 2012. Other auto
makers, including South Korea's Kia Motor Co. and China's Chery
Automobile Co., also make cars in Iran. But after Peugeot left and
Renault stopped shipping in components, auto output plunged to some
800,000 units a year.
At one stage, Pars Khodro all but stopped assembling Renault
cars. During a recent visit, the unpainted steel bodies of several
local version of the Renault Megane sat rusted on an assembly line.
But on another line a floor below, Pars Khodro is now turning out
70 no-frills Renault-designed Tondars--called the Logan outside
Iran--a day.
Renault last year wrote off about EUR500 million ($580 million)
in funds that it had received over the years from sales in Iran
because it said under current banking restrictions it can't
repatriate the money. Renault executives have discussed buying a
stake in its partner Pars Khodro, using some of those stranded
funds, according to people familiar with the matter. Serious
discussions over such a move wouldn't be possible until sanctions
are permanently lifted, however.
Pars Khodro is 85% owned by Iranian state-run car manufacturer
Saipa. Renault's Iranian unit, Renault Pars, has broached the idea
of taking up as much as 45% of Pars Khodro, these people said. It
is unclear how much any such deal would value Pars Khodro, which
manufacturers other lines of cars besides Renault.
A Renault spokesperson declined to comment on any approach, but
executives have signaled in the past they are moving cautiously.
"There are still sanctions on Iran," Renault Chief Executive Carlos
Ghosn told a Paris gathering on Monday, speaking about the
company's general plans in the country. "So we've got no room for
maneuver."
Jason Chow
in Paris contributed to this article.
Write to Benoît Faucon at benoit.faucon@wsj.com
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