Iran says Peugeot to be replaced by ‘self-suffient local suppliers’

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Two sales representatives of Iran Khodro (IKCO), manufacturer of Peugeot, stand at an automobile exhibition. Photo – Hassan Ghaedi/Fars

Iran Khodro, Iran’s main automobile company, announced on Wednesday it has the full capacity to cope with French car maker Peugeot’s decision to halt exports of vehicle kits for assembly, reports coming from Tehran said.

Ahmad Nematbakhsh, secretary of Iranian Automakers Association, said such a move cannot have a great impact on the country’s car industry as Iran is able to produce or supply the parts needed for Peugeot passenger cars domestically. He added that the Iranian manufacturers can produce the needed parts or supply it through third companies.

“Iran has reached 98% of self sufficiency in producing Peugeot 405 parts and 75% in Peugeot 206 parts,” the industrialist said.

Peugeot’s parent company PSA Peugeot Citroen in February suspended its sales of car assembly kits to Iran, its top export market in terms of trade volume so far.

Analysts believe the decision is tied to Peugeot’s alliance with US group General Motors, and US sanctions pressure on Iran over its disputed nuclear activities.

Shot in foot

French auto workers’ union have denounced the country’s largest automaker’s decision to quit the Iranian automobile market and said it cannot find a replacement. Peugeot has been forced to slash 8,000 jobs over Iran sanctions, media reports said.

“We have no sales not for economic reasons but for political reasons. The Iranian market is one that cannot easily be replaced for Peugeot. It’s an unacceptable decision for us,” Jean-Pierre Mercier from a closed Peugeot plant told in an interview.

The firings are causing political and economic temperatures to boil in the country that saw the election of a Socialist leader after more than a decade.

“If the state can prevent Peugeot from selling cars to Iran, why cannot they prevent these firings? Unfortunately, the unions insufficiently mobilised to tip the scale and stopped the embargo,” Mercier said.

Critics say Peugeot’s auto sales this year are down nearly a quarter of a million units, almost exactly the amount that Iran would have normally purchased.

Political bickering

Meanwhile, PSA Peugeot Citroen came under a fierce attack from France’s Minister for Industrial Renewal Arnaud Montebourg last week ahead of talks on 8,000 jobs cuts.

“We have a real problem with Peugeot’s strategy, the alliance with General Motors, the behaviour of its shareholder,” Montebourg said on France Inter radio, before meeting with Peugeot boss Philippe Varin last week.

French President Francois Hollande described the plan as “unacceptable” and said his government will announce a programme for supporting the automobile industry on Wednesday.

PSA, the biggest French carmaker and second in Europe to Germany’s Volkswagen, is struggling with falling European sales. It announced last week it would cease production at its historic Aulnay plant north of Paris, which employs 3,000 people. Another 1,400 jobs are also going at its Rennes plant and about 3,600 positions are to be cut across the corporate structure.

The announcement sparked trade union anger and underlined the difficulty for French industry to compete in international markets, a key factor in the stagnation of its economy.

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