ENTRY INTO THE MIDDLE EAST: Automaker Volkswagen is ready to begin a sales offensive in Iran now that trade sanctions on the Middle Eastern country have been lifted. Image: AFP
BERLIN, Germany - Automakers are racing for Iran following the country's breakthrough nuclear deal with Western powers - pitting past market leader PSA Peugeot Citroen against challengers such as Volkswagen.
Tuesday's (July 14) accord, in which Tehran agreed to curb its nuclear programme in return for an end to sanctions, still faces hurdles including a skeptical US Congress and a frantic Israeli lobbying for its rejection.
But automakers, which stand to be among the early beneficiaries, have been positioning themselves with varying degrees of discretion since late 2013 when the latest talks were launched and a limited number of sanctions suspended.
PEUGEOT MAKES EARLY INROADS
Within hours of the announcement of a final deal on Tuesday (July 14) Paris-based Peugeot had outlined plans for new Iranian production to reclaim and defend the leading market position it held before sanctions were tightened in 2011.
Thomas Wuelfing, a consultant on Middle East trade, said: "Industry leaders are itching to get into Iran. As far as the auto industry is concerned," he said. "It's the last big emerging market."
Iranian car registrations approached 1.6-million at their 2011 peak before collapsing under the weight of sanctions. Domestic production fell by a million vehicles from 2012 to 2014, destroying more than 100 000 jobs.
In the partial thaw since 2013 sales have recovered to an expected 1.2-million in 2015, according to IHS Automotive. An end to sanctions would see the market bounce back to 1.6-million in 2016, the forecaster predicts - and many in the industry see potential for a further expansion to 2 million.
IHS Automotive's Michel Jacinto said: "Returning European automakers now face a stiffer challenge from Chinese rivals such as Chery and Lifan whose cut-price cars have gained ground under sanctions. However higher-quality brands should win back market share in a rising post-sanctions economy, with Japanese automakers also well placed to benefit.
"For Peugeot and VW, success in Iran is very important, it's the gateway to the wider Middle East."
The accord drew no immediate reaction from Peugeot rivals such as Renault or Volkswagen but insiders say almost all of the industry's big names are active behind the scenes.
Jacinto said: "Old ties in the region give the French a certain edge but we also see the potential of this lucrative market."
GM, FORD BARRED FROM IRAN
General Motors and Ford may have to wait longer to navigate a deeper layer of American sanctions that will continue to bar Americans and their banks from Iran. GM declined to comment on Tuesday's (July 15) deal.
Peugeot now enjoys a head start despite its 2012 decision to stop supporting Iranian re-assembly of outdated European-made models under pressure from GM, then a shareholder. Manufacturing partner Iran Khodro, the country's biggest automaker, instead began sourcing parts for the Peugeot 405 sedan and 206 sub-compact from intermediaries - effectively restoring the brand's near-30% market share.
Iranian registrations of "unauthorised" Peugeot cars are currently running at about 350 000 a year, according to the French automaker, which does not book the sales in its accounts. To maintain that foothold as the market opens Peugeot plans to invest in full Iranian production of new models using its latest architectures and engines, for domestic sales as well as export.
Talks under way with potential partners are "most advanced" with Iran Khodro, the company told Reuters on Tuesday (July 15).
RENAULT WANT SLICE OF THE PIE
Renault, a smaller player in Iran with a 5.9% market share before sanctions were tightened, is also looking at more competitive successors to its first-generation Logan sedan model, still sold there as the Tondar.
Renault sales chief Jerome Stoll said: "Iran is a market where we have ambitions, but we're not the only one. We'll need to come up with a response to real consumer demand, rather than a backward-looking response to demand that has been captive for years."
Germela, the trade consulting firm, is mobilising its German automaking clients with the help of a new Tehran office.
Executives from Iran Khodro and second-ranked SAIPA will be on a 30-strong Iranian automotive delegation attending a September 2015 "matchmaking" seminar near Frankfurt with counterparts from across the German industry.