IRAN: Renault mulls new US Iran Executive Order as IKCO claims CKD Clio build

By Simon Warburton | 23 July 2013

Renault says it is studying closely new sanctions imposed against Iran by the US as domestic manufacturer, IKCO, claims a tentative agreement has been been reached to build CKD Clio type 3 and 4 models at some point in 2013.

Iran Khodro (IKCO) said today (23 July) it would produce the Clio types 3 and 4 in the near future, with a spokesman for the manufacturer telling just-auto from Tehran that "it will be soon, this year."

However, any potential Clio production would come at an extremely sensitive time politically with regards to Western companies doing business with Tehran and hot on the heels of US President Barack Obama's recent Executive Order clamping down even further on automotive business in Iran.

"We really do not have any product concerning Clio in Iran," a Renault spokeswoman told just-auto from Paris. "We respect the previous requirements and now we are studying very attentively the new ones, just to make sure how they really impact our activities and how we can take the appropriate measures to respect them.

"The sanctions, they target the supply of complete knock downs, this is a key point. We know it is becoming more complicated so we really have to go deeper into this."

Renault added it currently produces and sells Logan and Megane models in Iran, but there is rising pressure coming from the US President and lobby groups that appear to be increasingly targeting the automotive sector.

"There is no point in enlarging our activities - it is pretty much the opposite," said the spokeswoman. "Now we are really studying very closely to see in technical detail what the real impact [will be] from the new sanctions from the US."

Obama's Executive Order says the export of finished vehicles to Iran is not sanctionable, but knock-down kits exported to the country for assembly would be considered as goods and services used in connection with the automotive sector.

"The export of such kits to Iran would be sanctionable if the transaction is 'significant,'" noted the Order.

IKCO added although no formal deal had been signed to produce the Clio 3 and 4, there were "some agreements" between both companies to produce the models in Iran.

"They are not producing now, they are going to be produced," said the IKCO spokesman. "There was a delegation from Renault [that] came to Iran for negotiations - they are going to be CKD - production will start this year."

Renault imports parts as well as having localised production in Iran and has a subsidiary known as Iran Pars, 51%-owned by the French automaker and 49% by a domestic partner.

The issue of automotive involvement in Iran is extraordinarily sensitive, with the West ramping up sanctions against the regime some maintain is undertaking proposed enrichment of uranium to develop nuclear weapons.

PSA Peugeot Citroen ended parts shipments to Iran as European Union (EU) sanctions were imposed, but sources in the country have claimed IKCO was continuing to produce Peugeot vehicles using complete localisation.

PSA said it no longer supplied parts to Iran, partly as as result of the difficulties in obtaining finance due to severe banking sanctions imposed by the EU and the US.

The United Against Nuclear Iran (UANI) lobby group, headed by former US ambassador to the United Nations, Mark Wallace, says it is concerned about Renault's "Iran business activities" and has informed the French automaker of the new US sanctions.

"It is time for Renault to end its business in Iran or face sanctions," said a UANI statement.