Iran suspends Renault Logan project

Iran suspends Renault Logan project  
Filed under:
Hatchbacks, News, Renault
on 04/19/2006

Source: AFP

Iran has suspended a car-manufacturing project by the French automobile company Renault due to an apparent export dispute, a government official said.

"As long as Renault does not respond to our needs, the project is halted," Industry Minister Ali-Reza Tahmasebi was quoted as saying by state television.

Renault struck a deal with Tehran in 2004 to produce the Logan, a budget compact family saloon, as part of a joint venture between Renault Pars, the car giant's Iranian concern, and the Automotive Industry Development Co, grouping Iran's two main state-controlled carmakers, Saipa and Iran Khodro.

An initial agreement was signed in March 2004, with 51 percent of the operation held by Renault, to produce the Logan in Iran, where it would be branded the L-90.

Iran is now demanding that it be able to export a portion of the production to the French automobile manufacturer's traditional markets, according to a ministry official quoted by the Fars news agency.

"The French segment must put part of its export market at Iran's disposition with regard to the Logan L-90 project and the application of the contract depends on this," Mohammad Karmimi told Fars.

The Iranian student news agency ISNA quoted an unnamed Renault executive in Iran as saying the French manufacturer was "in the process of discussing the L-90's export conditions."

The 300-million-euro (369-million-dollar) deal, was the largest direct and long-term investment in Iran by a French company since the formation of the Islamic republic in 1979.

Annual production, beginning in 2006, was expected to start at 300,000 units.

Renault's rivals Peugeot and Citroen are both already engaged in Iran but under more limited joint ventures.

Iran has seen a sharp growth in demand for new cars in recent years, far outstripping domestic production and imports subject to punishing duties. In 2003, market demand amounted to 700,000 units.

The L-90 is also tipped as a primary successor to the Paykan, Iran's ubiquitous national car. It is a gas-guzzling descendent of Britain's long-forgotten Hillman Hunter, which sold Iran its production line in the late 1960s.

The Paykan, produced by Iran Khodro and with about as much charm as an East German Trabant, is due to cease rolling off the production line in 2005.

Renault has also said it intends to launch production of the Logan -- which will cost upward of 5,000 euros (6,155 dollars) -- in China, Romania, Russia, Colombia and Morocco. It is touted as a budget model that conforms to European safety and environmental standards.

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