PSA Group’s Peugeot and Citroen forged joint venture agreements with Iranian carmaker Iran Khodro and SAIPA respectively after the 2015 Iran nuclear deal was clinched. With the belligerent US President Donald Trump withdrawing the United States from the historic accord, the French automotive giant has announced that it is forced to halt its operations in Iran.
However, so as to preserve the company’s long-cultivated reputation, PSA has implemented safeguards to deliver the cars it has already presold in Iran through its local partners, IKCO’s website reported.
Through the joint ventures, two models namely small SUV Peugeot 2008 and city hatchback Citroen C3 were to be manufactured in Iran. The Iranian companies have already presold hundreds of units of the two models, Financial Tribune reported.
The secretary of Iranian Specialized Manufactures of Auto Parts Association Arash Mohebinejad says a sufficient amount of auto parts have been imported into the country to make the production of the presold units of Citroen C3 and Peugeot 2008 possible.
He adds, “The production of the two models will be suspended eventually after we run out of the necessary auto parts.”
Bottlenecked Supply
Following Trump’s underhand move, imports of parts for Peugeot 2008 were bottlenecked leading to delays in delivery of presold cars. The delay triggered confusion in the market with customers anxious to see whether they would be able to get their hands on the promised vehicles.
Head of the Peugeot-IKCO joint venture (better known as Iran Khodro Automobiles Peugeot or its acronym IKAP) Mohammad Reza Motamed has also tried to alleviate customers’ concerns by saying the company is ready to fully deliver on contracts signed for the presold Peugeot 2008s.
Motamed apologized to the public for the unforeseen delay in the delivery of the vehicles, adding, “We are committed to fulfilling our commitments to those who have purchased the Peugeot 2008. Customers need not worry about the production and distribution of the vehicle.”
Citroen’s parent company PSA Group had already announced that they will make good on current obligations and deliver the 2,000 presold C3s.
Trump reneged on the landmark Iran nuclear deal back in May to place Iran under economic pressure. The US will reimpose sanctions on Iran’s thriving auto industry as of August 6.
Sanction Waivers
While major French companies had signed joint ventures with Iranian firms following the nuclear pact, known as Joint Comprehensive Plan of Action, they are now forced to abandon investments in Iran after the US refused to grant the companies waivers that would have effectively allowed the companies to retain operations in Iran.
On July 13, French Finance Minister Bruno Le Maire announced that the US has rejected a French request for waivers for its companies operating in Iran, including the PSA Group.
Group PSA’s Peugeot and Citroen brands and their archrival Renault signed joint ventures with Iranian companies after the nuclear deal was reached between Iran and six major powers in July 2015.
While Renault’s lack of presence in the American market to some extent makes it immune to the upcoming sanctions, the PSA Group is vulnerable as the company is already deep in the process of returning to the North American market.
Peugeot
IKCO and Peugeot signed a €400-million deal in June 2016. Through the 50-50 joint venture known as IKAP, three models, namely Peugeot 208, 2008 and 301 were to be produced in Iran.
Up to now, IKAP has delivered over 5,000 Peugeot 2008 to car enthusiasts. By March 2018, the company had presold 16,000 vehicles to Iranian customers.
The SUV is the first product of IKAP. According to the Iran Standard and Quality Inspection, the model has gained four stars out of five every single time audited by the organization.
During the first three months of the current fiscal which started in March, 2,563 units of Peugeot 2008 were manufactured in Iran.
Peugeot is a popular brand among the Iranian public. Vehicles carrying the emblem of Peugeot have a 33% share of the cars rolling out of Iranian carmakers factories. Three models, namely the SUV 2008, the supermini 206 and the family sedan 405 are manufactured in Iran.
During the first quarter of the year which started on March 21, 94,034 units of the three models were produced in Iran, down 1.77% compared to the previous year.
Citroen
Car enthusiasts made a 600-million-rial ($14,285) down payment on May 16 when SAIPA-Citroen launched a limited presale of the Citroen C3, offering 2,000 of its long-awaited hatchback to the public.
SAIPA and PSA’s brand Citroen signed a 50-50 joint venture in late 2016 under which the Paris-based carmaker had undertaken to invest more than €300 million ($352 million) in Iran during the next five years. Two Citroen models namely C3 and C4 were to be mass-produced in the country.
The C3 is a small hatchback which was to be produced in the central city of Kashan. The model is equipped with a six-speed automatic gearbox and a 1.6-liter turbo four-cylinder engine with a 163hp output.
It meets Euro 5 emission standards and was initially unveiled in 2002 in France. The latest version of the car, which was introduced in 2016, was to be made in Iran. Parts for production of the C3 were imported into Iran from Slovakia.