Renault Joins Push for Iran Deals -- WSJ
August 08 2017 - 03:02AM
Dow Jones News
By Matthew Dalton in Paris and Asa Fitch in Dubai
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 8, 2017).
French car maker Renault SA is set to open a new factory in
Iran, in the latest sign of deepening Western business ties with
Tehran following the lifting of sanctions.
Renault said Monday the factory would produce 150,000 vehicles a
year, in a joint venture with state-owned Iranian conglomerate
Industrial Development & Renovation Organization, or IDRO, and
Parto Negin Naseh, which imports Renault vehicles to Iran.
The deal, which the head of the IDRO said was worth about EUR660
million ($777 million) in its first phase according to Iran's state
news agency, comes on top of Renault's existing joint venture in
Iran. Renault declined to comment on the deal's value.
The agreement is the latest in a wave of deals by Western
corporations following the 2015 nuclear accord, with European
companies so far appearing more active than their U.S.
counterparts.
European energy and infrastructure giants, including Germany's
Siemens AG and France's Total SA, have reached major deals in Iran
since the lifting of sanctions, defying a push by the Trump
administration to penalize Iran over its ballistic-missile
program.
Against a backdrop of renewed sanctions pressure under President
Donald Trump and Congress, American investors have been skittish in
their approach to the Iranian market.
The Trump administration imposed its latest round of sanctions
last month, and Congress passed additional sanctions targeting
Iran, Russia and North Korea. Mr. Trump signed that bill on
Wednesday.
Under the deal announced Monday, Renault will be the majority
shareholder in the venture after an initial period of joint
control. It announced in September plans to form the new venture,
but only fully disclosed the partnership structure Monday.
Cars will start entering the country late in the next Iranian
year, which ends in early 2019, IDRO chief Mansour Moazami said.
The Iranian calendar runs differently to the Western one.
In addition to the vehicle plant, Renault said an engine plant
with a capacity of 150,000 units a year is also planned. The
facilities will be in Saveh, 70 miles south of Tehran.
Renault has 60% of the shares of the venture, with the remaining
20% with IDRO and 20% with Parto Negin Naseh, according to the
Islamic Republic News Agency. The deal would create 3,000 jobs, it
added, and Renault would provide distribution, sales and
after-sales services.
Renault already had capacity to build 200,000 vehicles a year in
Iran before the new production deal, but its expansion had been
slowed by sanctions before the nuclear accord.
In Jan. 2016, Western powers and the United Nations lifted
penalties intended to block Iran from developing a nuclear weapon,
after confirming the country was sticking to the initial terms of
the 2015 accord.
Since the deal, western firms have moved in. Last month, Total
said it would sign a deal to complete a $1 billion investment in an
Iranian gas field as part of a partnership with China National
Petroleum Corp. and an Iranian company.
Shortly after sanctions were lifted, French auto maker Peugeot
launched a EUR400 million joint venture with Iran Khodro, Iran's
biggest car maker, which aimed to make 200,000 cars a year. Citroën
also signed a more-than EUR300 million deal with Iran's SAIPA in
October.
Renault has seen sharp growth in Iran, doubling its automobile
production in the country to 68,365 in the first half of 2017
compared with a year earlier. That growth helped Renault boost its
share of the Iranian market to 9.7%.
Write to Matthew Dalton at Matthew.Dalton@wsj.com and Asa Fitch
at asa.fitch@wsj.com
(END) Dow Jones Newswires
August 08, 2017 02:47 ET (06:47 GMT)
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