Why French Carmakers are real Winners of Iranian Protectionism

IKCO’s production and sales of French vehicles is significant — and growing. Figures show that IKCO output increased by 30.8% in 2016. Of the close to 400,000 cars it produced last year, 94,474 were a version of the Peugeot 206; 97,959 units were different types of the Peugeot 405; and 78,703 were a version of the 405, known as Peugeot Pars. In total, cars produced in partnership with PSA constitute a whopping 70% of IKCO’s production.

Separately, Pars Khodro produces the Renault L90 — called Tondar — and Megane. Pars Khodro has also seen an astonishing increase in its sales and production, which increased 190% last year. Compared to IKCO and SAIPA, Pars Khodro is much smaller, producing less than 5% of total output.

Based on figures circulated in Iranian media, PSA and Renault’s market share in Iran is as high as 33%. The Iranian market is at present estimated at one-third the market size of Germany. Therefore, it is little wonder that Iran is globally significant for the business strategies of PSA and Renault. The fact that both of these firms face fierce competition elsewhere in the world only adds to Iran’s significance.

Protected by high import tariffs and pressed to satisfy domestic demand, IKCO has actively sought cooperation with French carmakers, with the French eager to oblige for their own reasons. IKCO CEO Hashem Yekkeh Zare quietly traveled to France in the spring of 2015 to negotiate deals with PSA executives.

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