Renault Eyeing Return To Iran When Sanctions Lift

For the past few months, sanctions against Iran for their nuclear ambitions have sidelined PSA and Renault from the Persian market. Behind the scenes, General Motors outmaneuvered PSA despite their one-time alliance allowing them to muscle their way into aan emerging market via loophole abuse and an unknown quantity of Camaros. With GM out of the way, however, PSA would now be free to regain their footing once sanctions were lifted.

PSA won’t be alone in the upcoming battle, of course, as their compatriots at Renault have plans to return to Iran to reclaim what was lost, and then some.

At the World Economics Forum in Davos, Switzerland this week, Renault-Nissan CEO Carlos Ghosn announced that Renault would be willing to return to Iran once sanctions were lifted so as to capitalize on the potential 50 percent growth in sales. Currently, the sanctioned market represents between 700,000 to 800,000 vehicles, but could explode to between 1 million and 1.5 million units by the end of the 2010s once the market is freed, benefiting both Renault and PSA due to the popularity of French brands in Iran.

Renault’s departure from the Iranian auto market early last year, was out of fear of non-compliance of the sanctions issued against Iran by the United States, consequences of which would have led to Nissan having a tough time as far as U.S. sales were concerned. The pullout cost Renault 64,500 units worth of sales in the nation — 40,000 less than predicted by French newspaper La Tribune back in late July 2013 — and a first-half provision of $698 million that contributed to a 95 percent plunge in net income from Persian sales in the same period.

The vehicles sold in Iran by Renault consisted of Dacia Logan variants built locally from component kits in a partnership with local manufacturer ICKO.

With the noted presence of Iranian President Hassan Rouhani at the annual Davos gathering, Ghosn is confident that the “well-engaged” discussions about resuming international ties between Iran and the West are a sign of good things to come for his company, and for all others waiting to stake a claim. Iran’s auto market is expected to explosively to 1 million units, or 50 percent larger than Australia’s own market, by 2020.

Not that Tehran is waiting, of course.