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Groupe PSA suspends Iran JV activities over US sanctions risk

ABR Staff Writer Published 05 June 2018

French automaker Groupe PSA has suspended its joint venture (JV) activities in Iran with looming threat of sanctions from the US.

The company will pull from two of its JVs in the country to avoid the risk of US sanctions, after Washington withdrew from nuclear deal with Tehran.

Other French companies including Total are trying to get exemptions, after the Trump administration has imposed sanctions on Iran.

PSA stated that it has begun the process of suspending its JV activities, to comply with US law by this August. The company has also started engaging with the US government, with support from the French government to obtain a waiver.

The company and its rival Renault have signed joint venture agreements in Iran before the sanctions were imposed with Iran Khodro and SAIPA.

In 2016, PSA formed a 50/50 JV with Iran Khodro. The JV expected to invest up to €400m over the next five years in manufacturing and R&D activities.

With the investment, PSA planned to produce, launch and market its Peugeot 208, 2008 and 301 models, fitted with latest-generation engines.

In the same year, the company signed a framework agreement with SAIPA in Iran. SAIPA has been Citroën’s historic partner since 1966.

The two companies have agreed to form a JV to produce and sell Citroën vehicles in the country.

Renault announced its plans to establish a new plant with a capacity of producing 350,000 vehicles per annum in the country.

PSA stated that Iran makes up less than 1% of its turnover and thus it can have negligible impact on its overall objectives nor its current financial guidance.

PSA along with several companies rushed into Iran, after the sanctions were lifted from the country in early January 2016.

Image: PSA Group suspends its Iranian joint ventures. Photo: Courtesy of TTTAAA/Wikipedia.org