SAIPA Devising Strategy to Counter Headwinds

EghtesadOnline: Second largest automaker in the country SAIPA says they have an action plan in place in the event of probable headaches coming in the way of Iran’s auto industry.

News ID: ۷۸۲۷۷۳

30 May 2018

Managing Director of SAIPA Mohsen Jahroudi stated during a recent interview with local automotive website Persian Khodro that they have prepared to face sanctions and mitigate their impact as they have long been planning for it.

With a defiant tone in the face of the US president’s underhand move to pull the country out of the historic nuclear deal and threaten to impose new sanctions on Iran, Jahroudi says as a nation, Iranians have lived through sanctions for years, and have learned how to cope with them.

He says the company will do all in its power to take the edge off the possible impact of sanctions if they reimposed. “Fortunately, 40 days before the United States reneged on the 2015 Iran nuclear deal, we devised a plan which can act as a safety net for SAIPA.” Jahroudi did not specify how the company will counter the looming sanctions, according to Financial Tribune.

In regard to the company’s joint ventures with European automotive firms, the carmaker outlined a relatively sustainable prospect. “The US intends to exert pressure on us…Our European partners are committed to carrying out their contracts in Iran.”

He cited the presale of the first SAIPA-Citroen product last week as evidence of the Europeans’ commitment.

The French automotive giant presold 2,000 units of its small city hatchback C3 in its initial offering in the country on May 16.

Blocking Statute

News coming from Europe attests to their dedication to salvage the Joint Comprehensive Plan of Action on Tehran’s nuclear program.

On Friday, the European Commission said they had started the process of renewing a sanctions-blocking measure to protect European businesses in Iran.

The measure, called Blocking Statute, forbids EU companies from complying with the extraterritorial effects of US sanctions, allows companies to recover damages arising from such sanctions from the person causing them and nullifies the effect in the EU of any foreign court judgments based on them.

European Ties

SAIPA and PSA’s brand Citroen signed a 50-50 joint venture in late 2016 under which the Paris-based carmaker has undertaken to invest more than €300 million ($352 million) in Iran during the next five years. In addition to C3, another Citroen model, namely, C4 will also be manufactured in Iran.

The production site which used to be called SAIPA Kashan— located in central Isfahan Province—has been renamed to SAIPA-Citroen and is considered one the most modern production facilities in Iran and is equipped with the latest technologies available in the country.

According to company officials, in addition to the C3 and C4, SAIPA-Citroen is set to manufacture a B-class SUV in Iran in 2019 and a B-class sedan specially designed for the local market the following year.

In addition to the C3, several other models are manufactured at Kashan production plant, including the homegrown Saina and Tiba along with Changan C35 which is made in collaboration with the Chinese carmaker in Iran.

Contingency Plans

SAIPA is playing it safe and exploring other partnerships elsewhere so as to offset potential losses in case European firms are forced to terminate their operations in Iran.

The managing director of SAIPA visited the headquarters of two of its Chinese partners, Brilliance and Changan, on his trip to China in April to discuss fostering new collaborations.

Chongqing Changan Automobile Co., a major state-owned automaker in the southwest China city of Chongqing, signed a joint venture deal with SAIPA in 2014 to produce vehicles in Iran. The company is set to produce two new models in Iran in the near future.

In 2015, Brilliance signed a deal with SAIPA to produce its H300 and H200 series in Iran. SAIPA and Brilliance currently produce four models in the country, namely H220, H230, H320 and H330 and have plans to manufacture four more.

During Jahroudi’s China tour, the Iranian carmaker met with his foreign counterparts, renewing ties and planning for expansion of Brilliance and Changan’s range of products in Iran.