By on August 11, 2010

Now that at least partial civility has returned, with Congress having been officially notified that no ghosts were found in any Toyota machines, and that “the evidence points to a preponderance of cases where people who claimed unintended acceleration were pressing the wrong pedal,” it’s time to ratchet-down the tension on both sides.

In diplo-speak, that’s called “confidence-building measures,” or CBMs for short (not to be mistaken for ICBMs.) Toyota is performing CBMs. In a country that is suspect of  building ICBMs.

A day after Congress signaled that they are ready for some Glasnost & Perestroika in regards to the, well, let’s call them now “concerns” about Toyota, Toyota announced that they “suspended auto exports to Iran indefinitely with an eye toward the potential repercussions on sales in the key U.S. market,” says The Nikkei [sub]. You rub my back, I rub your back, and then let’s have some more CBMs.

In that treasure-trove of crowd-sourced knowledge, Wikipedia, confidence-building measures are defined as “certain techniques which are designed to lower tensions and make it less likely that a conflict would break out through a misunderstanding, mistake, or misreading of the actions of a potential adversary.” In this case, it could be more like: Let’s kiss, make up, and focus on a common adversary.

In the Iran, the centrifuges continue to spin and produce radioactive material that will not be used to treat cancer. The U.N. Security Council, the U.S. and the European Union have strengthened sanctions against Iran. As far as the U.S. go, any company that breaches those sanctions can kiss the U.S. market good-bye.

Toyota believes that exports of peaceful Corollas or Land Cruisers do not violate the sanction regime of the U.S. Nonetheless, Toyota told Teheran to forget any more Toyota shipments.

We are not talking about a lot of cars. According to Toyota numbers, ToMoCo exported roughly 4,000 units to Iran in 2008. The number dropped to 250 in 2009.  By the end of May, the Iranians had gone on a small shopping spree and imported 230. Since May, no further imports came from Toyota to Iran.

The matter could have been quietly buried. It wasn’t. The timing and the announcements are not coincidental. Speaking of timing, it is also not coincidental that the CBMs are performed after the U.S. and Japan buried the hatchet on Okinawa, and that Japan sacked their Prime Minister that wasn’t all too popular in Washington. (If you think I’m hallucinating: I spent 25 years in a military/diplomatic family in Washington, and compared to what I experienced there, this here would be routine business.)

It will be interesting to watch what happens now. By publicly withdrawing from a market of 230 cars, Toyota handed Washington the perfect pretext to clamp down more. On more makers, more industries and more countries.

Staying in the automotive world, Iran’s second largest maker Saipa has joint ventures with Renault, Nissan, Citroen, and Kia.

Iran’s largest carmaker, Iran Khodro, is deep in bed with PSA Peugeot (the “Iranian national car,” the  Samand is based on a Peugeot 405). In addition, Iran Khodro had, at least until recently, joint ventures or alliances with Renault, Daimler and Suzuki.

Renault doesn’t seem to make any preparations for departure. Iran Khodro announced  in June that “in a bilateral cooperation, Iran Khodro Industrial Group and Renault Co. are going to produce new products based on X90 platform in Iran.” To Renault, a threat from Washington rings hollow, what market do they have to lose? A missive from Brussels would be more serious. But then, pressure could be brought on Nissan. Itai!

Others, like Daimler are a bit more cautious. In April, Daimler announced its intent to sever ties with Iran Khodro and said that they “plan to sell their 30 percent stake in Iranian Diesel Engine Manufacturing, a subsidiary of Khodro Diesel, plus they will withdraw an application to export commercial vehicles for civilian use to Iran.” It just so happens that in the same April, Daimler was in the grips of the Department of Justice for alleged bribes and got a pass after they paid $185m. Coincidence? Where I lived for 25 years, rule #1 was: There are no coincidences.  “Look at that poor guy. Wouldn’t it be sad if that would happen to you?”  (S.O.P. in the world I thankfully have left behind.)

Anyway, Daimler will not exit Iran completely. “The company will still honor existing contracts and provide support to their loyal Iranian customers,” wrote the Benzinsider. The E-Class apparently are still being locally produced  by Iran Khodro. The Benzinsider heard that Daimler will “cease to supply parts” for it. The matter remains murky. I bet it won’t be too hard to buy a nicely appointed Mercedes in Iran, be it an indigenous E-Class or an imported S-Class.

Some car makers may not have received the memo at all. Iran Khodro’s website announces that “Iran Khodro Diesel Co. (IKD) and South Korean Hyundai open a new chapter in industrial cooperation.” Hyundai has gobs and gobs of exposure stateside. What’s “ouch” in Korean?

If you are interested in the bigger picture, keep monitoring small events such as Toyota not delivering any cars anymore to Iran. Students of history will recall that the thaw between China and the U.S.A., and eventually the downfall of Communism as we know it, started with a ping-pong match.

If you can’t remember, Wikipedia has an article.

PS: If you or a loved one own or owned a Toyota, and were traumatized by dire warnings of impending death, emanating from government websites and Transportation Secretaries – our heart goes out to you. You have been unavoidable collateral damage  that simply happens on the way to the common good.

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14 Comments on “The Nuclear Option: Toyota Pulls Out Of Iran...”

  • avatar

    Worst case scenario:

    We’ll come home one day and hear on the news that Iran and Israel have nuked one another.

    Iran will NEVER have ICBM’s. If they do manage to pull a “North Korea” and get a working nuke on the table, the best they can hope for is reduction of economic sanctions in return for them not producing any more enriched uranium for another bomb. Neither Israel nor America show any respect at all to these countries on Bush’s “axis of evil” and now, all of them realize that the only way to get any respect at all is to develop nuclear weapons so they can be part of the Mutually Assured Destruction policy.

    Naturally everyone on the right will blame Obama for it.


    It didn’t work with India, Pakistan, Russia, China and its certainly not going to work with Iran.

    If Iran gets the bomb, I bet you $1 EGYPT will be next because those two countries are your “Sunni vs. Shiite” tribal warfare buddies.

    If Iran tries to build ICBM’s that will be Israel’s signal to attack. Of course, if they do, you’ll see a whole new era of anti semitic media and terrorist attacks.


    Any of you who believe in “the free market” asides from being theory are idding yourselves. This is proof of it right here. You just know, behind the scenes, Toyota is being threatened to pull out of Iran or else Aerica will cut their product out entirely. Its incredible that America is still in a cold war with Cuba, Iran and North Korea.

    • 0 avatar

      the worst case scenario is the U.S.A has invaded Iran. the reason the situation in the middle east affects the U.S.A, is because the U.S.A chose to protect and defend Israel. Iraq was not Israel-friendly and they got attacked(after a horrific costly war with Iran), the excuse was the invasion of Kuwait, later G.W Bush went back to finish the job, the excuse was weapons of mass destruction. The same might happen again with Iran, I hope it doesn’t happen.

    • 0 avatar

      And just think, all this could have been avoided if the US and the UK hadn’t gotten their knickers in a twist about Mossadegh a half-century ago.

      That situation, and the results we’re living with today, should give people pause when they get riled up about, e.g., Hugo Chavez.

  • avatar

    Given the miniscule number of imports that this represents, it was a token gesture by Toyota (and by default, Japan) to support the sanctions against Iran. Bottom line is that it won’t affect them financially in any appreciable way. And I don’t see America threatening a complete blockade of all Toyota’s coming to (and being produced in) the States over this, even if Toyota didn’t agree to stopping the shipment of 200+ vehicles.

  • avatar

    It will be interesting to watch what happens now. By publicly withdrawing from a market of 230 cars, Toyota handed Washington the perfect pretext to clamp down more. On more makers, more industries and more countries.

    What gets me isn’t that this kind of thing happens, it’s the hypocrisy of it. On one hand, you have Cuba, which isn’t a perfect place with the best of governments, but is subject to trade sanctions far worse than they really deserve, given that there are countries with human rights records that make Cuba look like angels; on the other, you have places like China (or Saudia Arabia, or Indonesia, etc, etc), which do have a problematic human rights record and yet have most of the western world falling all over themselves to do business with them.

    Pick a standard and stick to it. Or at least a standard better than “people we don’t like”.

    Or, better yet, stop pretending and admit that globalism as it stands just facilitates a race to the bottom anyway and stop playing ideological favourites. Codify this kind of nonsense: don’t stand there and engage in hang-wringing about “the free market” or “international obligations” when we’re talking about environmental standards or why we’re facilitating a wage drain to low-cost countries, and yet on the other get high-and-mighty when a country has the nerve to elect a leftist/islamist/whatever-ist-we-don’t-like government who actually exercises some backbone.

    Either shut up, or codify.

  • avatar

    I love the way that these big car firms ‘voluntarily’ stop selling stuff to Iran (or not as is the usual case with double dealing – backstabbing French companies), while others like the one I work for, are forced by law, sanctions and a myriad of other ‘incentives’ to cease trading with Iranian companies. We’re not even allowed to ship stuff to neighbouring countries if we so much as suspect it will be sold on to an Iranian firm.
    Absolutely nuts.

  • avatar

    Iran’s largest carmaker, Iran Khodro, is deep in bed with PSA Peugeot (the “Iranian national car,” the Samand is based on a Peugeot 405)

    Not only, the also produce the 206 that is very popular over there, and AFAIK, developed the 206 sedan. They continue to produce the 405 and IIRC some parts for French made cars come from Iran.

    I can tell you many things more if you’re interested. Also for grabs is a Samand review.

    Honestly I wouldn’t like that someone make war on them. Their factories are state of the art (or not that much old) and are on a good track to get industrialised. Trend that was catalysed by the sanctions they have.

    There’s a lot of automotive knowledge over there.

    Maybe the French won’t leave Iran on its own (we are talking about a market of 1M units/year + exports). They also have diplomatic leverage to avoid that. And they push Iran too by other means.

    But it will surely be a lot of problem for IKCO and SAIPA to make business. Those guys (the Iranians) are smart and after so many years blocked, very imaginative.

  • avatar

    This thing had been political from day one. There were widespread grumblings in the (usually conservative) Japanese industry that they had to suffer for the bad politics of Hatoyama.

    Toyota was made an example of what the U.S. can do if the other side doesn’t play ball.

    Message to the world: This can happen to you too.

    The only problem was that this time, it was transparent from day one, and executed crudely in gangland style. As my former father-in-law said: “Oh, they all do it. But usually, it’s done with more finesse and style.”

  • avatar

    Bertel, bitte beantworte die folgende Frage…

    What has the US to gain if Toyota stops exporting cars to Iran?
    Is it really worth making such a smear-campagne against Toyota
    just to block cars being sold in Iran? These cars are not weapons or anything.

    Yes, in a way i understand the US is showing their muscles, but dont they realize that this is exactly the reason the rest of the world dislikes them. Someday the tide will turn, and they should know the “rest” will not treat them nicely.

    “what goes around comes around”

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