Transfer of Shares of an Iranian Car Manufacturer to Citroën

With the transfer of shares of Saipa Kashan to Citroën, for the first time since the revolution, shares of an Iranian car manufacturer are being transferred to a foreign company. Mehdi Jamali, CEO of Saipa, announced the 50% share transfer of Saipa Kashan to Citroën. He stated: "After the implementation of the JCPOA, extensive negotiations were conducted with various countries, and the largest contract of this company with Citroën will soon take place. We are in the final stages of negotiations with this company, which will lead to technology transfer and the development of joint investment." The transfer of Saipa Kashan's shares marks the first time since the revolution that shares of an Iranian car manufacturer will be transferred to a major global company. The experience of the Iranian automotive industry over the past twenty years and the failure of foreign companies to fulfill their promises have led Iranian industrial officials to conclude that the way to prevent foreign companies from defaulting on their contracts with Iran is through joint cooperation and investment. Over the past twenty years, the most successful collaboration in the Iranian automotive industry was the joint production of the Renault Logan, known as Tondar 90 in Iran. In this joint venture, the French company Renault was obligated to invest 51% in Iran. Renault's investment in this project meant that even during sanctions, the company could not leave Iran and remained the only Western company that continued its activities in Iran even under the most severe sanctions. Additionally, Renault's investment and collaboration with around 50 Iranian parts manufacturers helped these manufacturers improve their production quality to international standards, to the point where the first-generation Logan produced in Iran ranked second in quality after Romania. This relatively successful experience, which satisfied Iranian customers in terms of quality, led Iranian automotive industry managers to conclude that other companies should also be required to engage in joint cooperation and direct investment in new contracts. Consequently, after the nuclear agreement, the approach of the Iranian automotive industry towards cooperation with major companies has changed. In new agreements, Iranian car manufacturers are trying to attract direct investment from foreign parties. Currently, apart from the purchase of Saipa Kashan shares by Citroën, foreign companies have attempted to form joint ventures with Iranian companies. Less than 48 hours after the sanctions were lifted, the German holding company Daimler, owner of Mercedes-Benz, signed the first memorandum for the re-production of its products in Iran with Iran Khodro Diesel. In this memorandum, Mercedes-Benz is set to invest directly in Iran and establish a joint company with Iran Khodro Diesel. Following the contract with Daimler, the second major contract was with Peugeot, which was signed during the Iranian President's visit to France. This contract fundamentally differs from previous contracts between Iran Khodro and Peugeot, as Peugeot is entering the Iranian automotive industry for the first time through direct financial investment. The establishment of a joint Iranian-French company with 50% ownership from each side is the most important aspect of this contract, which will lead to the transfer of up-to-date technology, the production of new products, and access to export markets. Despite such collaborative agreements, the purchase of a significant portion of Saipa Kashan's shares by Citroën is considered the first major acquisition of an Iranian car manufacturer by a foreign company. Renault, like Citroën, also plans to acquire about 80% of the shares of Benro, one of Saipa's subsidiaries. Peyman Kargar, Renault's Middle East director, stated: "According to Renault's new planning, our type of cooperation with Iran Khodro and Saipa will change. We will form two separate joint ventures with Iran Khodro and Saipa, one joint venture with Iran Khodro and one joint venture with Saipa. As it stands, Renault will take over Benro. Renault's share for buying and managing this company will be between 60% and 80%. We will work in such a way with Iran Khodro and Saipa that we will have management shares. In Saipa, the share will be 60% with Renault and 40% with Saipa. The same method applies to Iran Khodro. With this method, management of sales, after-sales service, and production will be with us, ensuring that we can provide the best service to customers and maintain quality in the best way. However, we are still working on the details of the contract. Regarding Iran Khodro, we are currently negotiating to select a production site within this company and need to see which of the company's sites will be assigned to Renault." Besides Renault, it is said that Volkswagen is also considering the potential purchase of shares in an automotive company in Iran to produce its products there. In recent months, Volkswagen officials have made numerous trips to explore investment opportunities in Iran. Initially, Volkswagen held negotiations with Iran Khodro, which did not yield results. Some news sources in Iran have reported that this German company prefers to work with the private sector in Iran. Some experts believe that if Volkswagen succeeds in acquiring shares of a private car manufacturer in Iran and invests directly in car production, it could elevate the technical level of the Iranian automotive industry. The potential presence of Volkswagen, alongside Renault and Citroën's factory acquisitions and Peugeot's direct investment in Iran, is likely to transform the Iranian automotive market.