Foreign automakers are supporting the regime in Iran by offering state-owned
companies access to advanced technologies that are often used for the Islamic
Republic’s military and security apparatus, a US-based pressure group has
warned.
United Against a Nuclear Iran (UANI), which this month ramped up
its campaign to get foreign automakers out of Iran, says that Fiat, Isuzu, Kia,
Mazda, Mitsubishi, Nissan, Peugeot, Renault, Suzuki, Toyota and Volvo either
export to the Islamic Republic or have manufacturing agreements with car
companies controlled by the regime.
Iran’s domestic auto industry is the
regime’s second most lucrative after oil and gas, and has boomed over the past
decade-and-a-half, as the Islamic Republic deemed it a priority
industry.
According to a report published this month by Business Monitor
International, the Iranian government has placed increased emphasis on its auto
business in an effort to create revenue in the wake of increasing US and
European sanctions.
European and Asian automakers, including Renault and
Fiat, have a large presence in the country, mostly through joint ventures with
state-owned Iranian companies, who manufacture vehicles under license, usually by
assembling imported ready made car parts.
However, UANI has accused
foreign car manufacturers of aiding the regime by partnering with the Islamic
Republic’s auto sector, by providing an enormous source of revenue, including
directly to companies controlled by both the Revolutionary Guards and the
Iranian Development and Renovation Organization (IDRO), both of which are
sanctioned by the US and EU.
IDRO, the government body responsible for
accelerating Iran’s industrialization, controls companies linked to Iran’s
nuclear and missile programs including foreign procurement of technologies to
aid them, according to Swiss sanctions legislation
IDRO’s subsidiaries
include the Iran Khodro Company, the largest automaker in the Middle East that
manufactures a range of foreign vehicles under license via partnerships with
several foreign auto makers, including French automakers Renault and PSA Peugeot
Citroen.
Via its joint venture with Khodro, Peugeot is the leading
foreign car brand produced and sold in Iran.
Last year, Peugeot’s Iran
exports accounted for around 13 percent of its global deliveries, and according
to Business Monitor International, Khodro manufactured around 150,000 Peugeots
in the quarter ending March 20, 2012. UANI says that Khodro produced 510,167
Peugeot vehicles in 2010.
This month, however, Peugeot said the company
is putting at least part of its business with Iran on hold.
A PSA Peugeot
Citroen union representative said the company’s production of vehicle kits for
shipment to Iran for assembly had been frozen for at least five months, in the
wake of international sanctions.
However, UANI says it remains unclear
whether Peugeot is still doing business in Iran, and if so to what
degree.
UANI spokesman Nathan Carleton told The Jerusalem Post that the
pressure group remains skeptical that Peugeot has terminated its business in the
Islamic Republic, pointing to a report in the hardline ISNA news agency that
Khodro intended to make 15,000 Peugeot Pars sedans this year in its Fars
factory.
In a recent report by Iran’s state-run Press TV, a Khodro
spokesman said the company has yet to receive any official announcement from
Peugeot that their partnership has ended.
Although Peugeot appears to be
reconsidering its business in Iran, other foreign automakers are set to stay.
UANI says that Italian auto manufacturer Fiat and its subsidiary Iveco have so
far ignored requests to end their business with Iran.
Fiat has
partnerships with Saipa, and Iveco has also licensed Iranian commercial
automaker Zamyad to produce some of its trucks and buses.
Like Khodro,
both Zamyad and Saipa are controlled by IDRO.
“The [Iveco] trucks have
been used by the Iranian regime to transport ballistic missiles and stage
gruesome public executions,” Carleton said.
According to Carleton, Fiat
is also planning to expand its consumer marketshare in Iran this year by opening
a luxury Maserati dealership in Tehran.
European car companies are not
the only ones to do business in Iran.
Japanese automaker Mazda has a
partnership with the Bahman Group, which produced over 36,000 cars in 2010.
According to Iran’s Mehr News agency, Bahman is controlled by the Revolutionary
Guards, who own 45.5% of its shares.
UANI has developed model
legislation, dubbed the DRIVE Act, requiring automakers to certify they are not
engaged in business in Iran to be eligible for US government contracts. It hopes
the campaign will pressure foreign car manufacturers to withdraw from Iran by
increasing their concern about public reaction and opinion.
Although some
foreign automakers have ignored requests to end their business in Iran, UANI
says that after it stepped up its auto campaign this month, some car
manufacturers have responded positively.
Earlier this month, Hyundai said
it had left Iran, where according to UANI it had extensive
operations.
More recently, luxury car brand Porsche also said it had
decided to cease its business with the Islamic Republic.
According to a
report this weekend by the Revolutionary Guards-run Mashregh News, however,
Porsche’s Tehran representative has denied the company plans to leave the
Islamic Republic.
Citing official customs statistics, Mashregh says that
during the last Iranian year (ending March 2012), Iranians imported 563 Porsche
vehicles at a total cost of $49.8 million.
Carleton said the
announcements from Hyundai and Porsche are “significant
victories.”
However, Mashregh brushed off Porsche’s announcement, saying
that any decision by the luxury automaker to cease its business with Iran would
have “no effect on Iran’s auto market,” as the Islamic Republic’s imported
luxury car market is very small compared with the market for domestically
produced automobiles.
Sanctions have caused the Iranian Rial to deprecate
significantly, pushing the price of foreign car imports out of reach of
increasing numbers of Iranian consumers.
Last month, Bloomberg reported
that Iranian dealers stocking foreign automobiles have started to see a downturn
in sales, an indication that demand for European and Asian cars in Iran is
plummeting.
A Persian-language report in the state-run ISNA news agency
last week said that Iran’s car imports and exports had slumped in the last
Iranian year.
According to an Economist report this month, Iranian
domestic car sales are expected to slump by a further 10% in 2012, as foreign
imports continue to shrink even more.
However, as sanctions make it hard
for Iranians to buy foreign imported cars, the Islamic Republic’s domestic car
industry may yet get a boost – particularly in the wake of a call by Supreme
Leader Ayatollah Ali Khamenei for Iranians to support the economy by buying
domestically-produced goods.
In his speech to Iranians at Nowruz last
month, Khameini said the key to beating sanctions was increased domestic
production.
Meanwhile, Iran’s state media continues to downplay the
impact on Khodro of any decision by Peugeot to cease its business with the
Islamic Republic, with a recent Press TV report saying the company was aiming to
export to South America, Eastern Europe and Iraq this year.
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