The Truth About Cars » ikco The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 23 Jul 2014 18:25:17 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » ikco Iran Is Open For Business: 1.5 Million Annual Unit Sales At Stake Tue, 26 Nov 2013 18:21:15 +0000 parsimg1fi9

Weeks prior to the historic deal reached between Iran and the “P5+1″ group of nations, TTAC reported on some of the machinations going on behind the scenes regarded the United States, France and their respective auto industries ability to do business in Iran. We put forth the theory that any deal with Iran would be a boon to auto manufacturers, who would have access to a market expected to be worth 1.5 million units in a few short years, with a very young population and a standard of living that is substantially better than many highly touted emerging markets.

At the time of publication, we encountered significant dismissal, if not disagreement. But as it turned out, negotiations had been ongoing since the start of 2013, and the preliminary deal appears to make the auto industry a big winner.

Within the next 6 months, the auto industry is expected to inject as much as $500 million into Iran. The auto industry, currently worth over 1 million units annually, will be a hotly contested ground for foreign firms looking to break into the market.

Despite apparently being muscled out of Iran by their alliance with General Motors, PSA’s arrangement with GM is now as good as dead, and that means that PSA has the chance to claw their way back to the top of Iran’s market. Last year, PSA sold nearly 458,000 units in Iran (CKD kits which are being erroneously referred to as spare parts kits). Renault, which sold roughly 100,000 Logans in Iran last year, will also be able to resume business.

But American firms also appear to have designs on Iran’s auto market, with French firms becoming increasingly concerned that American companies are trying to muscle them out of Iran. Speaking to Just-Auto, an unnamed official from IKCO, PSA’s former partner in Iran, said

“This is a new day for automakers. More than [just] previous partners, we can also host more automakers which are interested to come to invest in the automotive sector of Iran.”

French officials have previously asserted that GM’s desire to have PSA end its relationship with IKCO was a way to clear out Iran’s auto market prior to the resumption of trade between the two countries. Indeed, the sanctions regime, as well as pressure from GM, caused Renault and PSA respectively, to withdraw from Iran – leaving a 585,000 unit hole in a 1.2 million unit marketplace.

Previous TTAC reports have outlined how GM officials have been clandestinely meeting with Iranian officials via intermediaries – at the time it appeared to be in violation of sanctions, but new information, asserting that high-level talks between the two countries had been going on since early 2013, have given those discussions some legitimacy.

But now, Iran is open for business not just for GM or any other American firm, but auto makers in Germany, Italy and beyond. The broader questions – whether the deal between Iran and the West is a good one, or whether it’s worth negotiating such a deal in return for the associated economic opportunities – are best left for another arena. What’s germane to our discussion is the future of Iran’s auto market and who stands to benefit.

A foothold, if not outright dominance, of a major emerging market is substantial prize for any automaker forced to compete in a mature global market with an over-saturation of brands and increasing need for volume and scale. Prior to the deal, auto makers were looking to Indonesia, South Africa  and other markets that are substantially poorer, with lesser prospects for growth. The BCG report on emerging markets even shied away from speculating on Iran due to political instability. But all of a sudden, Iran is now open for business, and by the end of the decade, its auto market is expected to be 50 percent larger than Australia’s. It’s unclear which auto makers will rush in to this market. But Iran appears to be wasting no time.

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Iran Khodro Looking To Build Cars In Iraq Tue, 28 May 2013 15:47:23 +0000 IKCO Samand. Photo courtesy Athos Nobile.

While Russia, Indonesia, Brazil and even Burma get the majority of the car industry’s attention when it comes to emerging markets, Iraq is also considered to be an up-and-coming place to sell cars. Iraqis have a funny habit of enjoying cars that are linked to foreign armies; American cars are fairly popular in the country, and so are Iranian machines too.

Iraqis may have differing opinions on America, but Iran and Iraq fought a bitter, decades-long war that has had a profound effect on the country’s identity. In many ways, the enmity between the two sides is still present, but that hasn’t stopped IKCO, Iran’s national car maker, from capturing significant market share in the country – and not just among their coreligionist Shias either.

The next step for IKCO is a car factory in Iraq. Just-Auto reports that a factorywhich we reported would be coming online last year – will finally be up and running, producing as many as 30,000 Samands (based on the old Peugeot 405) annually. That could theoretically give IKCO a quarter of Iraq’s car market if the Samands ended up being sold entirely in Iraq. Given the sanctions against Iranian goods in the global marketplace, it’s possible.

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Customs Data: More Than Half Of Iran’s Car Parts Still Coming Through Wed, 20 Jun 2012 12:45:59 +0000 Further on yesterday’s story on PSA’s, and by extension GM’s, alleged continuous supply of embargoed car parts to Iran, Bloomberg reports that Iran’s imports of automobile parts decreased by 47.8 percent to $254 million in the two months since March 20.

In other words, more than half of the previous amounts still come through. From March 20 to May 20, Iran imported more than 21,100 tons of car parts, says Bloomberg, citing Iranian newspaper reports based on customs data.


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Media Reports: Peugeot Violates Iran Sanctions. UANI: Investigate GM! Tue, 19 Jun 2012 16:43:49 +0000

GM-partner PSA has repeatedly stated that shipments of parts to Iran’s carmaker IKCO (a.k.a. Iran Khodro) had stopped in February, and would not resume until September, if at all. The parts are for the 206 and 405 models, and PSA said it stopped shipping them in response to sanctions on Iran. IKCO says it’s not true at all, ships are unloading parts and the lines are running.

A report of just-auto says there are “deeply conflicting views as to whether or not PSA Peugeot Citroen has halted shipments.”

In a call to Teheran, just-auto was told that “there is not any problem in shipments of Peugeot product parts – shipments of Peugeot are continuing here.”

In a call to PSA HQ in Paris, just-auto was given a totally different story: “We have nothing to add to what we have already said – that is shipments are suspended – there is nothing more to say,” a PSA spokesman said.

Meanwhile in the U.S., lobby group United Against Nuclear Iran (UANI), reports that “IKCO has not yet received any official announcement from Peugeot indicating a halt in their mutual cooperation.” A week ago,Mark D. Wallace, former U.S. Ambassador to the U.N. and CEO of UANI said in an op-ed piece that statements to the effect that Peugeot had stopped shipments of parts to Iran “simply do not jibe with reality,” and that “it is hard not to feel like GM and Peugeot are simply trying to make this controversy go away without making the responsible decision to truly end their business in Iran.”

Wallace and UANI called on Senator Carl Levin, chairman of the Armed Services Committee, to hold GM accountable for whom it partners with. Wallace wrote:

“In light of the taxpayer-funded $50 billion bailout of GM and the U.S. Treasury Department’s current 32 percent stake in GM, it is completely unacceptable for GM to be financially aligned with a company that is doing work with a regime responsible for the deaths of U.S. servicemen. The GM-Peugeot partnership seems to run afoul of U.S. sanctions, and it should be investigated.”

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Sanctions Cause PSA To Suspend Iran Khodro Shipments Thu, 03 May 2012 12:50:31 +0000

Sanctions imposed on Iran by the EU and the United States have compelled PSA to delay parts shipments to Iran Khodro until September at the earliest.

Iran Khodro needs parts to build cars like the 206 and the ancient (by modern standards) 405. The delays are expected to cost both parties about $10 million per month.

Speaking to Just-Auto, a PSA spokesperson said

“We have withheld shipments to Iran until July…It is for financing reasons because of the sanctions. I guess in May or June it will be reviewed. Most factories are closed in France in August, so if you start again it will be in September.”

Some have suggested that General Motors, which has entered into an alliance with PSA, has put pressure on the French firm to suspend or end its ties with the Iran Khodro, but GM steadfastly denies this.

Just-Auto also spoke to an Iran Khodro spokesman who was optimistic that the company could find replacement parts, and expressed hope that negotiations regarding Iran’s controversial nuclear program would go well, leading to a resumption of business as usual. PSA’s Iranian business interests are worth $1.57 billion, or 1.5 percent of PSA’s total revenue.

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Iran Khodro Plans Euro IV-Compliant Engine Family Despite Looming Sanctions Tue, 10 Apr 2012 15:53:12 +0000

Even as the EU sanctions continue to add up, Iran’s national car maker is going in the opposite direction. Iran Khodro is set to launch a new engine family that will comply with the latest Euro-IV emissions regulations for use in their Peugeot-based models.

The new motors, dubbed the XUM series, can run on gasoline or natural gas, and will be installed in the IKCO Samand and the Iranian-built Peugeot 405.  The XUM engine is scheduled to go into mass production in June, but Peugeot parent company PSA has recently suspended parts shipments to IKCO, impeding production of vehicles like the 405. While Iranian business only accounts for 1.5 percent of PSA’s annual revenue, IKCO is highly dependent on Peugeot. The Samand is only sold in Belarus, Russia and Switzerland, which are non-EU countries. IKCO may be taking its environmental lead from the EU, but their wares aren’t going to be sold there anytime soon – or anywhere, if the sanctions are successful.

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