Iran plays hardball with Renault over contracts

25th April 2006, Comments 0 comments

TEHRAN, April 25, 2006 (AFP) - Iran's industry ministry has warned Renault that it risks having two major contracts cancelled unless it agrees to new business conditions, a report said Tuesday.

TEHRAN, April 25, 2006 (AFP) - Iran's industry ministry has warned Renault that it risks having two major contracts cancelled unless it agrees to new business conditions, a report said Tuesday.

The ministry has already said a contract with the French auto giant to build the budget L-90 Logan model has been suspended until a dispute over production exports was resolved, but the ISNA agency said a deal to build the Mégane model in Iran was also in danger.

"Production of Mégane is subject to the fate of L-90," deputy industry minister Mohsen Shaterzadeh was quoted as saying. Assembly of the Mégane had been scheduled for launch in May.

Iran is demanding that it be allowed to export some of the cars it manufactures to the French automobile manufacturer's traditional markets.

Renault struck a deal with Tehran in 2004 to produce the Logan as part of the joint venture of Renault Pars, the car giant's Iranian concern, and the Automotive Industry Development Co, grouping Iran's two main state-controlled carmakers, Saipa and Iran Khodro.

The 300-million-euro deal, was the largest direct and long-term investment in Iran by a French company since the 1979 Islamic revolution.

The French car maker has proposed to Iran that it can export some parts, but insists the Iranian demand is unworkable.

"Renault is obviously in favour of exporting as much as 20 percent of the L-90 Iranian production, however, we can not commit on this," Renault Pars said in a statement last week, citing factors "such as trade agreements between countries" and currency differences.

It noted that the company foresaw the launch of production "later this year."

The statement also referred to a "slight delay within certain assembly plants due to technical reasons" — another source of complaints by the Iranian industry minister.

Copyright AFP

Subject: French news

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