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French carmaker Renault signs €660 million deal with Iran

French automaker Renault signed on Monday a long-awaited joint venture deal with Iran worth 660 million euros ($779 million) to build up to 300,000 cars per year.

French carmaker Renault signs €660 million deal with Iran
Photo: AFP
The new deal puts Renault in partnership with Iran's state Industrial Development and Renovation Organisation (IDRO) and private firm Parto Negin Naseh.
   
Renault will hold a 60-percent stake with IDRO and Parto Negin Naseh 20 percent each.
   
“The first phase of this accord worth 660 million euros provides for the annual manufacturing of 150,000 cars,” IDRO head Mansour Moazami said at a signing ceremony in Tehran.
   
He said the first cars will roll off the assembly line in around 18 months.
 
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The new venture will produce Renault's Duster and Symbol models at a refurbished factory in Saveh, around 120 kilometres (74 miles) southwest of Tehran.
   
A second, three-year phase will start in 2019 with production ramping up to 300,000 cars per year.
   
Under the deal, 30 percent of the cars and parts made by the venture will be exported.
   
“We are happy to sign one of Renault's most historical contracts here,” said Thierry Bollore, number two of the French carmaker, at the signing.
   
“Within Renault, Iran is known for its great industrial potential, its automotive industry infrastructure, strong human resources and unique geopolitical position,” he added.
   
Unlike its chief competitor PSA, which makes Peugeots and Citroens, Renault never fully quit Iran during the sanctions period and already makes some 200,000 cars a year in the country.
   
But it had to put a brake on its growth plans until Iran concluded a nuclear deal with world powers that came into force in January 2016, easing international sanctions.
   
“Renault has proved its committment with a nonstop presence in Iran since the beginning of its operation in 2004, and this signing confirms our strong intent and commitment for long-term operations as a strategic partner of Iran's automotive industry,” said Bollore.
   
“This is a unique agreement in terms of investment, of technology transfer… of the development of Iranian talent, and in the creation of a modern engineering and production centre,” he added.
   
Negotiations were painstaking, with Renault reportedly reluctant to meet Iranian requirements to source 40 percent of their parts from local manufacturers, which have struggled to keep up with international standards.
   
PSA, which quit the country when international sanctions hit in 2012, has been quick to rebuild its presence in Iran, which was the company's main engine of growth last year.
   
It signed a 400-million-euro deal in June 2016 to build 200,000 Peugeots a year with Iran Khodro, and another with Iran's SAIPA to build a similar number of Citroens.
   
Overall production in Iran is expected to reach two million cars a year by 2020, up from 1.2 million in 2016.
   
French firms have been at the forefront of rebuilding trade ties with Iran since the nuclear deal, with energy giant Total signing a billion-dollar gas deal last month despite mounting pressure from Washington to isolate the country.
 

RENAULT

France ready to cut Renault stake to shore up Nissan partnership: minister

France is ready to consider cutting its stake in Renault in the interests of consolidating the automaker's alliance with Nissan, Finance Minister Bruno Le Maire said on Saturday.

France ready to cut Renault stake to shore up Nissan partnership: minister
A Renault employee works at the automaker's factory in Maubeuge, northern France. File photo: Ludovic MARIN / AFP
He was speaking in Japan after Italian-US carmaker Fiat Chrysler pulled the plug on its proposed merger with Renault, saying negotiations had become “unreasonable” due to political resistance in Paris.
 
In an interview with AFP on the sidelines of the G20 finance ministers meeting in Japan, Le Maire said Paris might consider reducing the state's 15-percent stake in Renault if it led to a “more solid” alliance between the Japanese and French firms.
 
“We can reduce the state's stake in Renault's capital. This is not a problem as long as, at the end of the process, we have a more solid auto sector and a more solid alliance between the two great car manufacturers Nissan and Renault,” he told AFP.
 
Last week, FCA stunned the auto world with a proposed “merger of equals” with Renault that would — together with Renault's Japanese partners Nissan and Mitsubishi Motors — create a car giant spanning the globe. The combined group would have been by far the world's biggest, with total sales of some 15 million vehicles, compared to both Volkswagen and Toyota, which sell around 10.6 million apiece.
 
But the deal collapsed suddenly on Thursday, with FCA laying the blame at the door of Paris. 
 
“It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” FCA said in a statement.
 
Le Maire said Renault should concentrate on forging closer ties with its Japanese partner Nissan before seeking other alliances.
 
Things need to be done “in the right order…. First the alliance (between Nissan and Renault) should be consolidated and then consolidation (more generally) and not one before the other.”
 
“Otherwise, everything risks collapsing like a house of cards,” he warned.
 
The minister said it would be up to the bosses of Renault and Nissan to decide how to push the alliance forward as ties between the two firms have been strained after the shock arrest of former boss Carlos Ghosn.
 
Renault is pushing for a full merger between the pair but there is deep scepticism of the plan at Nissan.
 
There were varied reactions from the French unions Saturday.
 
“The government is behaving like the agent of the big shareholders, favouring short-term profit to the detriment of the interests of the country,” said Fabien Gache, of the CGT union.
 
Cutting the state's share in Renault was abandoning its responsibility in the country's auto industry, he argued.
 
Franck Daout of the CFDT union said it backed a three-way alliance between Renault, Nissan and Japan's Mitsubishi — but not one between Nissan and Renault until the alliance had reached a “safe and sustainable maturity”.
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