Iran signed the country’s biggest-ever car deal worth several hundred million dollars with French manufacturer Groupe Renault on 07 August 2017 to produce 150,000 cars a year, the latest advance by a European company into Iran’s sizeable consumer market. The €660 million or $778 million deal follows the lifting of the U.N. and European Union sanctions after Iran’s 2015 nuclear agreement with world powers to curb its controversial uranium enrichment program, a possible pathway to nuclear weapons.
It also comes just days after new U.S. sanctions on Iran were signed by President Donald Trump, who spoke with French President Emmanuel Macron over the weekend about ways to counter Iran’s influence in Mideast conflicts. The U.S. legislation, first passed by Congress, imposes penalties on people involved in Iran’s ballistic missile program and anyone who does business with them. Unimpeded by U.S. sanctions that apply to American businesses, however, European companies have raced for a share of Iran’s market since international sanctions were lifted.
Just last month, France Total SA and a Chinese Oil Company signed a $5 billion agreement with Iran to develop the country’s massive offshore natural gas field in the first such deal since the landmark nuclear deal was struck. Also, Airbus and Boeing have signed deals worth tens of billions of dollars to supply Iran’s national carrier with new aircraft. Renault and other European companies are looking to rebuild their presence in Iran following the lifting of international sanctions. Renault says that in the first half of 2017, its sales in Iran increased by more than 100 percent to 68,365 vehicles a nearly 10 percent market share.
Also last year, French carmaker PSA Peugeot Citroen reached a deal to open a plant producing 200,000 vehicles annually in Iran. Peugeot was a major player in Iran’s car market before international sanctions were imposed. Iran produces about 1,350,000 vehicles a year, though authorities hope that number will reach 3 million annually by 2025. There are around 30 car manufacturers in Iran, most of which assemble Chinese and Korean cars in Iran.