Iran's state-owned car manufacturer Iran Khodro unveils in Tehran on February 20, 2010 for the home market the Peugeot 207i, a locally built version of the French automobile firm's 207 model
Iran's state-owned car manufacturer Iran Khodro unveils in Tehran on February 20, 2010 for the home market the Peugeot 207i, a locally built version of the French automobile firm's 207 model. © Atta Kenare - AFP/File
Iran's state-owned car manufacturer Iran Khodro unveils in Tehran on February 20, 2010 for the home market the Peugeot 207i, a locally built version of the French automobile firm's 207 model
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Cyril Julien, AFP
Last updated: December 1, 2013

Carmakers rev up for return to Iran market

Major carmakers and parts suppliers showed up in Tehran on Saturday to assess the Iranian market's "considerable potential," just one week after Iran's historic nuclear agreement with world powers.

The International Conference of the Automotive Industry, the first such event in Iran, has brought together more than 150 companies from around the globe, according to organisers.

The key industry has been battered for more than a year by Western sanctions on Iran over its nuclear programme.

Industry Minister Mohammad Reza Nematzadeh said he wanted "more cooperation with foreign companies," including French manufacturers Peugeot and Renault, both of which have had a long history of doing business with Iran.

Nematzadeh said he hoped for the lifting of sanctions on the car industry "by the end of December."

Iran and world powers reached an interim deal last week in Geneva, with Tehran agreeing to partially roll back its nuclear work in exchange for limited sanctions relief, including measures imposed on the car industry.

In 2011, Iran had the 11th largest car market in the world and was the 13th automobile producer.

Patrick Blain, president of the International Organisation of Motor Vehicle Manufacturers, told AFP of "considerable potential" in the Iranian market.

"There is no reason not to come back," he said, adding that Iran could manufacture 1.6 million vehicles in 2014, the same number as it produced in 2011.

He highlighted the low car saturation rate of 89 vehicles per 1,000 people, less than China, in a country with a population of nearly 77 million and a yearly per capita GDP of almost $12,500.

Clear government support

Gilles Normand, director of operations for Renault in the Asia-Pacific market, said the Middle East represented a "future market" for all manufacturers.

In Iran, "50 percent of the fleet of over 20 million vehicles is more than 25 years old," said Normand, whose company's activities in Iran have been severely affected by US sanctions.

Renault, present since 2004 in Iran, sold more than 100,000 cars in 2012, accounting for 10 percent of the market.

Peugeot, which left Iran in spring 2012, sold 458,000 vehicles the previous year in Iran.

The French firm has renewed ties with its longstanding partner, Iran Khodro, said a source within Iran's top car manufacturer.

"We had good talks," the source told AFP.

Sasan Ghorbani, the conference organiser, said government officials "were very clear about their support for foreign investors."

"There have been very good meetings here that will lead to future agreements," he told AFP.

But for participants, the economic recovery can only materialise if sanctions are eased and curbs lifted on financial transactions as quickly as possible.

Normand said he preferred to wait for implementation of the agreement signed in Geneva, expected to come into force in January.

"We have a pragmatic policy, we respect international sanctions," he said, while adding that talks with suppliers were underway to resume operations in Iran.

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