Why Are Iran Khodro and Peugeot Threatening Each Other?

After the nuclear agreement, Peugeot was one of the first automakers to announce its intention to start operations in Iran as quickly as possible. Iran Khodro has also reported serious negotiations with this company over the past year. However, after a year of negotiations, the managers of both Iran Khodro and Peugeot have begun to threaten each other. The French-language site "Challenges" reported that "Peugeot Citroën is fed up with endless negotiations with Iran Khodro and has decided to put the negotiations on the table publicly in less than two weeks." But what information might Peugeot disclose that it has threatened? After Peugeot's sanctions in 2012, Iran Khodro continued to produce the Peugeot 206 with the Peugeot brand in Iran by sourcing parts from Chinese suppliers. About 60% of the parts for the Peugeot 206 were localized that year, and Iran Khodro tried to continue producing this vehicle with the Peugeot brand in Iran by sourcing the remaining 40% from second-tier Chinese manufacturers. The unauthorized production of this product in Iran, for which the rights had not been fully transferred to Iran Khodro, could be one of Peugeot's leverage points in an international court if Peugeot loses hope of returning to Iran. However, the CEO of Iran Khodro has described Peugeot's behavior as psychological warfare. Hashem Yekeh Zareh, CEO of Iran Khodro, told IRNA: "Peugeot's shareholders have put immense pressure on the automaker to explain why it has not achieved success in negotiations with Iran Khodro, as they know several automakers are looking to start operations in Iran." Carlos Tavares, Chairman of Peugeot Citroën, stated in an interview with Challenges: "I see problems. They attack us because we left (Iran). Very aggressive articles are published in the Iranian press against us." While Peugeot threatens to disclose certain information, Iran Khodro is seeking compensation for the cancellation of its cooperation contract by Peugeot. In another case, Iran Khodro forced Mercedes-Benz to pay compensation for unilaterally canceling its contract with Iran Khodro Diesel due to sanctions, which Mercedes-Benz accepted. In late 2011 and early 2012, Iran Khodro deposited 250 million euros through Bank Tejarat into the account of Société Générale in Paris. However, despite the payment being made, Peugeot refused to deliver parts to Iran, and dozens of containers of Peugeot parts purchased by Iran remained in a Belgian port for a long time. Ultimately, after a year of efforts by the Iranian side and Bank Tejarat, the 250 million euros were returned to Bank Tejarat, and the purchased parts were never delivered to Iran. In 2012, Peugeot left Iran due to global sanctions and the purchase of about 8% of its shares by General Motors. The Iranian side had spent millions of dollars on building infrastructure for Peugeot products. Unlike the Iranian side, the French company did not invest in Iran and managed to exit without financial loss. One of the significant pressures the Iranian side is exerting on Peugeot is the requirement for investment in Iran. Peugeot had previously been unwilling to invest in Iran and had made substantial profits from its collaboration with Iran. In contrast, its French competitor Renault made direct investments in Iran and, due to this investment and a 500 million euro loss during the sanctions, could not leave the Iranian market. However, Peugeot managed to do so easily. Hashem Yekeh Zareh announced that the condition for new cooperation with Peugeot is direct investment by the French company, stating, "Iran Khodro has announced its new conditions in recent negotiations with Peugeot France, including a 50% investment by Peugeot with Iran Khodro and transforming Iran into a center for exporting cars to regional countries, which the company's officials have accepted." Despite the pressures from the Iranian side, Peugeot has shown some flexibility compared to the past. Jean-Christophe Quar, head of the Africa and Middle East region at Peugeot Citroën, says: "Initially, we proposed a different type of relationship. But now we are suggesting a partnership model with the Chinese, meaning the establishment of a 50-50 joint venture, transferring technology and knowledge in industrialization." He previously told Reuters: "An agreement between Iran and Western powers will pave the way for significant progress in our negotiations. Unlike previous conditions under which Iran Khodro assembled older Peugeot models, under the new partnership, vehicles will be produced using the latest Peugeot architecture and engines, and the outcome of this project will be a generational leap." The new architecture for Iran refers to the production of the new PF1 platform in Iran. Peugeot will build four of its vehicles on this platform (chassis, powertrain, and suspension), including the Peugeot 208 in the hatchback segment, the Peugeot 2008 in the crossover segment, the Peugeot 301 in the sedan segment, and the Citroën Elysee in the Citroën sedan segment. According to information released by the Peugeot Citroën group, Peugeot products will be produced at Iran Khodro and Citroën products at Saipa using this platform. Producing a platform for four products will give Peugeot more flexibility for investment in Iran, as it can produce four of its products in Iran by investing in a new engine and chassis. However, this plan faces a serious threat from negotiations between Volkswagen and Iran Khodro and Fiat and Saipa to start cooperation and take Peugeot Citroën's place in Iran. For this reason, Peugeot officials have intensified their negotiations with the Iranian side. According to Figaro, Jean-Christophe Quar has increased his trips to Iran in recent months to advance this agreement. He told Le Figaro: "We are ready to sign the agreement. Rouhani's trip to France (scheduled for mid-November) should expedite matters.