Renault Seeks Two New Contracts in Iran

Despite Peugeot's lead in the Iranian market after the nuclear agreement by signing a new contract with Iran Khodro, Renault, which has not exited the Iranian market despite economic sanctions, seems to be in no hurry to finalize new contracts. The company is carefully drafting the terms of two separate contracts with Iran Khodro and Saipa. Renault plans to sign its first contract with Saipa and the second with Iran Khodro. In addition to these two contracts, the company is examining several automotive units in Iran to purchase a manufacturing unit and produce directly in Iran. Peyman Kargar, Renault's director for the Middle East, stated: "Renault's contract with Saipa and Iran Khodro will fundamentally differ from Peugeot's agreement. We will not operate like Peugeot. They work on a fifty-fifty basis with Iran Khodro, while we want Renault to manage the project in collaboration with Saipa and Iran Khodro. Therefore, in the contract with Saipa, Renault's investment share will be 60% and Saipa's will be 40%. The percentage of cooperation with Iran Khodro has not yet been determined." Currently, competition between Iran Khodro and Saipa to finalize contracts with Renault has intensified. One of the competitive aspects between the two companies is the production of the Renault Kwid. Renault intends to produce the Kwid, its cheapest product, in Iran and introduce it as a replacement for the Pride. Peyman Kargar recently announced that Renault aims to launch this product in the Iranian market at a price of 25 million tomans. He stated: "We want to produce the cheapest Renault model in Iran. This car could be the best alternative to the Pride. We are negotiating with our two partners, Iran Khodro and Saipa. However, if we do not reach an agreement with these two automakers, we will seek other methods to produce this car in Iran. To produce this car in Iran, we need at least two years. For the price of this car to reach around 25 million tomans, about 80% of its production must be localized." The Kwid was first introduced in India, produced and sold there with 95% localization at a price of $5,000. Carlos Ghosn, CEO of Renault-Nissan, said about this vehicle: "Given the needs of the Indian market, we introduced this vehicle in the mini crossover class, and in the future, we will also produce sedan and hatchback models based on this vehicle. We utilized the joint experiences of Renault France and Nissan Japan in its construction." The Renault Kwid is the cheapest car produced by a top-tier automaker globally, which has led to competition between Iran Khodro and Saipa for its production. The newspaper Donya-e-Eqtesad reported: "Iran Khodro has informed Renault that they are only willing to sign a new contract if the production of the company's low-cost product, the 'Kwid,' is assigned to them. In other words, since the Kwid is one of Renault's cheapest products, it is considered an important option for the Iranian automotive market. Undoubtedly, if either of the two major automakers can host this product on their production line, it will change the game in the market for low-cost vehicles in their favor. Currently, the market for cars priced between 20 to 30 million tomans is largely held by Saipa, so if the Kwid goes to Saipa, this company will strengthen its position in the desired price range. However, if Renault assigns the Kwid to Iran Khodro, the blue team on Jaddeh Makhsous can show their strength in the low-cost market after years." Beyond the competition over the production of the Renault Kwid in Iran, the type of Renault's investment in Iran has also been a topic of various discussions. Peyman Kargar stated to the weekly Tejarat-e-Farda: "We were willing to buy Pars Khodro entirely, but they are not willing to sell; they are only willing to sell 20% of the shares, which is not useful for Renault. We are also willing to buy Iran Khodro's northern factory, but they are not selling. Iranian automakers are not willing to sell factories and land. They say they lack the necessary investment to produce new products, and Renault is willing to invest in the production lines of these companies through separate joint ventures with Iran Khodro and Saipa." In another interview with the industry-affiliated newspaper Gostaresh San'at, he explained: "In collaboration with Saipa, the preference is to utilize other sites of this company that have reduced production volumes for the new phase of cooperation. For collaboration with Iran Khodro, we will continue to use this company's site in the north of the country, where Tondar products are currently being produced. Additionally, we will negotiate for the production of new generation vehicles with Iran Khodro after signing the contract with Saipa, which could involve expanding the northern site or utilizing another site." Renault, in addition to directly producing vehicles in Iran, plans to establish its main vehicle design center in Asia in Iran. Furthermore, the company is looking to purchase a factory in Iran for the production of its new engines and gearboxes. Models such as the Renault Clio 4, Renault Captur, the new generation Renault Duster, and Renault Megane are among the new models that will be produced in Iran. The company aims to cover the Middle Eastern markets with its Iranian productions.