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Associated Press
In this Nov. 27, 2010, file photo, Milad telecommunications tower and residential towers are seen, as cars drive in an evening traffic jam in Tehran, Iran.

Iran nuclear deal hits gas pedal for carmakers

TEHRAN, Iran – The nuclear deal struck by Iran and six world powers will put more rubber on the road in the Islamic Republic.

The country’s major carmakers stand ready to start receiving parts again from French firms PSA Peugeot Citroen and Renault when the sanctions ease. That could see Iran’s stalled car production again take off, proving a boon to local automakers and potentially draw in more foreign investment from other manufacturers hoping to break into the market.

The nuclear deal struck in Geneva puts the brakes on the most sensitive parts of Iran’s uranium enrichment program in return for relief from economic sanctions. The sanctions expected to lift include those affecting Iran’s auto industry, its petrochemical exports, the sale of gold and other precious metals anad the supply of spare parts for Iranian airplanes.

Iran’s auto industry has been particularly hard hit by the sanctions. Car production in Iran this year fell by 72 percent compared to 2011, when it produced some 1.6 million cars.

The sanctions relief, due to start in early January, allows for the French companies to resume auto parts to Iran’s biggest carmakers Iran Khodro and SAIPA. Some 100,000 Iranian auto workers have been laid off because of sanctions. Plants in the country now run at less than half their capacity.

Officials at an international automobile conference that began Saturday in Tehran eagerly welcomed the deal.

"Iran’s global standing in car production, which was 13, has fallen (due to sanctions). I’m sure Iran will be able to compensate the fall of its share in the near future,” said Patrick Blain, president of the International Organization of Motor Vehicle Manufacturers. “International investors are expected to re-enter Iran’s market soon.”

Iranian Industry Minister Mohammad Reza Nematzadeh said Iran’s biggest carmakers are now holding talks with PSA Peugeot Citroen and Renault in Tehran for new joint venture projects and joint car spare parts production. That will greatly help Peugeot, Europe’s No. 2 automaker, which saw its profits hurt by the sanctions. Peugeot sold more than 450,000 cars annually in Iran before the sanctions. Renault sold more than 100,000 cars in Iran in 2011 before pulling out.

"PSA Peugeot Citroen and Renault will offer new cars to the market with the help of their Iranian partners,” the minister said. “They’ve been big contributors to Iran’s auto industry. Given the Geneva deal, we hope sanctions will be lifted by the end of December so that joint ventures with foreign carmakers can resume.”

Iran Khodro’s manager, Hashem Yekeh Zare, said his company is considering a joint project with Daimler AG’s Mercedes-Benz, but didn’t elaborate. Zare said his company is seeking greater self-sufficiency and is interested in importing auto parts and licenses for joint production.

Representatives from German, Indian, Japanese and South Korean auto manufacturers attended Saturday’s conference. But despite a recent thaw in relations between Iran and the U.S., including a historic phone call between moderate President Hassan Rouhani and President Barack Obama, no representative from a U.S. automaker attended the event. American carmakers have been absent from Iran since its 1979 Islamic revolution and the U.S. Embassy takeover. U.S. law blocks American carmakers from the Iranian market.

That’s not to say there’s no interest in American muscle cars. An Iranian advertising campaign in recent months promised an exhibition of American-made cars but it was never held. Iranian media did, however, report the arrival of some Chevrolet Camaros to the country earlier this year, apparently through third parties.

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