Foreign carmakers in quest for investment in Iran’s auto industry

The Auto Industry International Conference, in a final statement, called for facilitated regulations for the investment of foreign companies in Iran. A preliminary agreement last month between Iran and the six world powers in Geneva allowed for the lifting of some sanctions on the Iranian auto industry. Iran’s auto market as the world’s sixth developing market has attracted the interest of many accredited international auto-makers and parts-makers in resuming their operations in Iran as the potential demand for 1.5 million cars has made inevitable the need for improving the quantity and quality of products as well as diversifying the products in Iran, the statement said. Participants in the conference, a majority of them from the private sector, called on Iran’s new government to prepare appropriate conditions for foreign investment, saying facilitating investment laws and regulations in Iran is among the most important parameters for the development of auto and spare parts industries. They said that due to the positive atmosphere created after the recent agreement between Iran and the Group 5+1 (the five permanent UN Security Council members plus Germany), the private sector active in the auto manufacturing and associated industries in Iran believes that Iran has the capability to turn into a center for production and export of cars and its parts in the region, adding that they welcome all companies which are willing to cooperate with Iran in the regard. The Iranian automakers and auto part-makers also welcomed establishment of new research and development (R&D) centers in cooperation with foreign companies in view of Iran’s competitive market and the need for diversified products with modern specifications. On Saturday, Chairman of the Renault SA (RNO) in Asia-Pacific region Gilles Normand said that the RNO is readying to resume the export of car parts to Iran. "We can start the preparatory work” with suppliers while “waiting for the go-ahead on the possibility to export parts to Iran,” Normand said in an interview with Bloomberg on the sidelines of the Auto Industry International Conference held in the Iranian capital on Saturday. Such a move would require an opening of financial transactions channels with the country, he said. "There is work to be done since the agreement was signed and clarification on the rules is expected around January 2014,” he said. “We are following an extremely pragmatic policy and respect international regulations.” Renault sold more than 100,000 vehicles, amounting to 10 percent of the Iranian market, in 2012, Normand said. He further said that the automaker’s activity in Iran was hurt this year by additional US sanctions against Tehran, which led the automaker to stop the export of car parts in June. Normand said he hoped the six-month accord, seen as a first step toward a final deal, will lead to “new overtures” towards the Iranian market. Iran’s market has “immense growth potential,” he said.