The French Connection: GM-PSA Deal Will Bring Iran To Its Knees

Now we know why GM bought seven percent of PSA, a move for which most of the industry had no explanation. Forget overcapacity and scale effects. It was a carefully crafted plan to bring traffic in the Iran to a halt. Stuxnet is nothing compared to this.

Today, management of France’s PSA Peugeot Citroen will meet and decide whether it will continue to cut off Iran Khodro from the supply of parts needed to build the 206 and 405 vehicles, Just Auto says. PSA confirmed that it had already stopped shipping parts to the Iran for the month of March.

After the linkup between PSA and GM was announced, TTAC asked how a still partially U.S. government owned company can live with the fact that one of its partners is providing aid, comfort and car parts to the enemy. A day later, an influential US anti-Iran lobby group called on GM and Peugeot to shut down Peugeot’s Iran business due to Tehran’s suspect nuclear program.

Mark Wallace, a former US ambassador to the United Nations and head of United Against Nuclear Iran group said:

“As a working partner and now official stake-owner of Peugeot, GM owes it to its investors and customers to compel Peugeot into ending its business in Iran. By doing business directly with the Iranian regime, Peugeot supports the regime’s ability to develop its illegal nuclear weapons program, support terrorist proxies and repress the Iranian people.”

Shortly thereafter, GM announced that PSA had suspended shipments of vehicle components to Iran Khodro and that its alliance with Peugeot “is fully compliant with U.S. law governing trade with Iran.” PSA will decide month-to-month whether to ship parts to Teheran, GM will make sure that it won’t.

With an annual capacity of a million cars, and with its 2011 production hovering close to capacity, Iran Khodro is by far the largest automaker in the Middle East. With a size comparable to Chery or Geely, Iran Khodro would rank at around place 20 on the worldwide scale of automakers, if it would rank. For some strange reason, Iran Khodro has been boycotted by or did boycott OICA for many years.

Iran Khodro (aka IKCO) has a long standing relationship with PSA Peugeot-Citroen, and France. Ayatollah Khomeini had lived in French exile and returned to the Iran on an Air France jet. France’s Total was one of Iran’s largest oil customers. The Peugeot 405 based Samand is known as “Iran’s national car.” IKCO also builds Peugeot badged iron like the 206, 405, 407 and a rear-drive Roa, a bizarre mixture of a 405 bodyshell with the rear-drive running gear of the Paykan, aka the Hillman Hunter. Iran Khodro is dependent on core components coming from France, an extended boycott could result in a breakown of its car production and in unrepaired cars after they had broken down. Iran had been busy establishing new suppliers in China, but even the Chinese complained for quite a while that payments from the Iran had become complicated. By now getting money in and out of the Iran is pretty much impossible.

I am sure the breakdown of Iran’s automotive infrastructure was an unintended consequence of the GM-PSA linkup, but I am confident that someone will claim credit and say that this was all part of the plan. Ironically, the Iran had threatened two years ago to stop parts imports and to bankrupt Peugeot. Someone finally implemented the plan, and it was not Iran.