What Impact Will Trump's Election Have on Iran's Automotive Industry?

Despite several large contracts being signed between Iranian and European companies following the nuclear agreement, many companies, including some German, Japanese, and Korean firms, were waiting for the U.S. elections to determine their policies before deciding on cooperation with Iran's automotive industry. This impact is more evident in negotiations between the private sector and foreign companies. Iranian private automakers have revitalized in the post-JCPOA era and have been able to advance negotiations with major global automakers. Some news sources in Iran have reported that negotiations between Volkswagen and the Iranian private sector, although they had reached a conclusion, were postponed until after the U.S. election results were clear. Volkswagen is currently very active in the U.S. market and does not want its operations in America to be affected by its activities in Iran. The same reason has slowed down negotiations between Fiat Chrysler and Iran Khodro, as Fiat currently owns Chrysler, which is listed on the New York Stock Exchange. The company does not want to be under the scrutiny of the U.S. government due to its cooperation with Iran. The Korean company Kia Motors has also begun negotiations for renewed cooperation with Saipa, but it too has a significant share in the U.S. market and, like Volkswagen, does not want to sacrifice the American automotive market for Iran. Companies like Suzuki, Nissan, and Mazda, which are actively negotiating with Iranian parties, are proceeding cautiously as they await clearer policies from the new U.S. administration regarding the JCPOA and international cooperation with Iran. Among the companies that have signed contracts with Iran, French companies feel more secure as they do not have a share in the U.S. market and are looking to gain a foothold in Iran and turn it into their production hub in the Middle East. Among the French companies, Renault has the boldest policy, having not left Iran even during sanctions and being the only Western company to remain in the country. After the nuclear agreement, two new contracts were signed between Peugeot Citroën and Renault with Iranian parties after several months. Although both contracts are joint ventures, there are fundamental differences between the Peugeot Citroën contract, which had subjected Iran to the harshest sanctions before the nuclear agreement, and Renault, which remained the only Western company in Iran despite sanctions. Unlike Peugeot and Citroën, Renault intends to produce cars directly in Iran, while Peugeot will produce under the umbrella of Iran Khodro and Citroën under Saipa. Among non-French companies, Mercedes-Benz, which also has a broad market in the U.S., has boldly taken steps to produce passenger and heavy vehicles in Iran. Other truck manufacturers like MAN and Scania have also signed contracts with Iranian parties for production. Despite these contracts, companies that have not yet signed agreements are likely to wait longer until the new U.S. administration's policies become clear. However, some experts and managers in Iran's automotive industry have a more optimistic view. Davood Mirkhani Rashti, an advisor to the Automotive Manufacturers Association, stated, "It is unlikely that the outcome of the U.S. presidential election and Mr. Trump's election will have much impact on automotive negotiations, although there is a possibility of increased strictness in the cooperation and negotiations of foreign automakers with Iran, leading to more challenges and obstacles in the execution of contracts. Additionally, the problems that existed in the cooperation of foreign banks and the transfer of money and investment flows will intensify. Of course, obstacles in cooperation will increase, although it is expected that Europeans will not cooperate adequately in this regard. With the presence of the new U.S. president, it will certainly become more challenging for Iran's economy and investments. Changes will likely lead foreign companies to approach negotiations with Iran more cautiously." Saeed Leilaz, an automotive expert close to automakers, believes, "In general, the whole world and Iran will soon move past Trump's election victory, and there will not be a fundamental economic change in Iran. Trump's victory will not negatively impact investment contracts, as the Americans also need these contracts. One of Trump's promises is to improve the U.S. economy, and this improvement will undoubtedly come through engagement, not through political conflicts with Iran. The JCPOA was an international consensus, and it is unlikely that the U.S. will not adhere to it." Despite these statements, there is a possibility that even if Donald Trump does not violate the nuclear agreement, he could align with hardline Republicans, which could lead to obstacles for companies active in the U.S. market, potentially deterring them from investing in Iran or cooperating with Iranian companies. However, even if he pursues similar policies to those of George W. Bush, there is a possibility of some companies operating simultaneously in both the Iranian and U.S. markets, as companies like Volvo, Mazda, Nissan, or Mercedes-Benz operated concurrently in Iran and the U.S. during George W. Bush's presidency. The U.S. elections have also strengthened some economists' views on self-sufficiency, with Jamshid Pejvakin, an Iranian economist, stating, "Iran's automotive industry must achieve self-sufficiency by any means necessary so that it is not concerned about elections in a country like the U.S. Because, in any case, the U.S. has never behaved honestly with us and is always known for its broken promises and betrayals towards our country. We do not have good memories of this country."