An obscure story in the Azerbaijani press this past summer may be the tip of a much larger iceberg involving General Motors, PSA Peugeot Citroen and the Western World's current bete noir: the Iranian regime currently embroiled at the heart of a controversial nuclear program, which is subject to economic sanctions by the United States government.
Citing reports from Iran's Mehr news agency, an Azerbaijani news outlet reported that an unspecified number of brand new Chevrolet Camaro RS 2LT convertibles were imported by a divsion of Iranian conglomerate Iran Khodro. According to the report, the Camaros were sent from Miami to Paris, and then from Paris to Tehran via a Qatar Airways plane. The report also states that US Customs and Border Patrol documents list the final destination as the Aras Free Trade and Industrial Zone.
Iran Khodro, which manufactures automobiles in Iran, is among the Iranian industrial entities that has been hit hard by American sanctions against Iran, including those that specifically target its auto industry, which some parties allege is "major procurement network that imports material and technologies used to build uranium centrifuges instead of cars."
Given the serious penalties for violating sanctions against Iran, it seems almost unthinkable that General Motors vehicles would be exported to Iran for sale without any consequences. GM even stipulated that PSA suspend doing business with Iran and IKCO as part of its alliance agreement with PSA, an agreement that seems to have stalled at this point.
The links between PSA and IKCO were deep. Most of IKCO's cars were Peugeot vehicles of varying ages, branded as Iran Khodro, Pars or Peugeot vehicles, and built in Iranian factories. In a market of 1.12 million units annually, IKCO had production capacity for a million units per year, with IKCO and PSA's joint venture ruling the vast majority of those sales, while their factories ran very close to capacity in previous years. PSA alone accounted for roughly 458,000 units sold in Iran, while PSA rival Renault also had deep ties in Iran, selling 100,000 units per year, until it withdrew from the country, citing fears of violating U.S sanctions as a reason for walking away from the Iranian market.
Now, various French news outlets, including Le Figaro, a respected daily newspaper, are accusing General Motors of intentionally gutting PSA's ties with Iran and then attempting to establish links with IKCO to help gain a beachhead in this up and coming market, one that Boston Consulting Group estimates is good for 1.5 million units per year by 2020, making it one of the strongest of the "Beyond BRIC" countries.
Le Figario states that
Iranian automotive industry is particularly courted by General Motors . The giant came into contact with Iran Khodro, which worked until 2012 with Peugeot to produce 206 and 405 models that the French group has stopped delivering to Iran because of Western sanctions imposed on Tehran for its nuclear ambitions . "For at least six months as emissaries of General Motors go to Iran, they are no longer the simple identification of the market," warns the industry, "but rather to the draft contract resumption of GM ", which was firmly established in the time of the Shah.
The sale of the Camaros was apparently allowed under a loophole in Executive Order 13645 signed by President Obama, which punishes any foreign entity that sells or supplies parts or services to Iran's automotive industry (specifically its manufacturing sector) but does not prohibit supplying Iran with assembled vehicles.
Le Figaro alleges that GM is not the only company to be looking to Iran if and when relations between America and Iran thaw amid a resolution over its nuclear crisis, but it does call out an ad campaign on behalf of GM undertaken by an Iranian law firm – other reports also point to a social media campaign designed to target Iranian consumers on behalf of GM. Other allegations leveled at GM include the use of emissaries on behalf of GM visiting Iran and IKCO as part of a broader push to undermine established French business interests in favor of American companies in preparation for the resumption of commercial dealings with Iran. One source cited by Le Figaro doesn't think that this was a mere coincidence. The source claims that Executive Order 13645 is
"…a real cleansing of the Iranian car market as it prepares to make way for U.S. manufacturers before a political deal between Tehran and Washington."
During the initial stages of the tie-up, the alliance between GM and PSA was difficult to discern. Beyond vague platform sharing and purchasing agreements, there seemed to be few synergies that made such an alliance worthwhile. By the Iranian angle adds context to the entire affair.
Many observers feel that Iran's Islamic regime is living on borrowed time, thanks to a relatively young population that is plugged into Western popular culture – these same people came very close to toppling the regime just a few years ago. While regime change doesn't seem to be in the cards anymore, then the very sanctions designed to bring the regime to its knees might at least foment some sort of normalization of relations in exchange for the forfeiture of Iran's nuclear program, along with a new, more moderate ruler (though Iran's unelected religious leaders still hold all the power).
Putting pressure on PSA to ends its relationship with IKCO is a way of keeping the heat on Iran. By crippling its auto industry, a major engine of its economy is taken out of commission, while also cutting off an artery for hard currency via reduced vehicle exports.
As early as 2012, our own global sales reports showed that sanctions and other economic factors had effectively gutted Iran's automotive market, composed largely of locally built IKCO/PSA products, and the departure of PSA and later Renault leaves a 585,000 unit hole in Iran's nearly 1 million strong auto market, one that GM is primed to capitalize on if and when things get less frosty and trade relations between the two countries open up .
The timing is likely to be fortuitous, as Iran's auto market is expected to grow by another 500,000 units. GM's push won't be centered around Camaros either. GM has a number of Chinese brands selling cheap, compact vehicles that can go head to head with Chinese brands like Great Wall that are already established in Iran. If GM really does make a big push into Iran, brands like Wuling and Baojun will be just as important as Chevrolet and Buick.
Talk of the death of the GM-PSA alliance over platform sharing may have been a red herring all along. GM may have decided to abandon the alliance, or any pretense of it, after getting what they came for: in this case, an express pass to a promising emerging market that isn't a BRIC country. But don't count PSA out just yet. Recent talks with Chinese auto maker Dongfeng could allow it to get back in the game in Iran, free of any concerns about violating U.S. sanctions.
from The Truth About Cars http://www.thetruthaboutcars.com
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