Renault project gets into gear

02 June 2006

France's Renault has signed the final contract with the local Automotive Industry Development Company (AIDC) to produce L90 Logan cars in the country. The two sides resolved nagging disagreements over exports to conclude the deal by 24 May. The first cars are to roll off the production line later this year, with production reaching 250,000 cars a year by 2008 (MEED 21:4:06).

French investment is expected to reach about $2,000 million, but only several hundred million dollars will be spent in the early stages of the project. The Logan will cost Eur 6,750 ($8,544) and at least 20 per cent of the cars made inside Iran will be exported, despite earlier French reservations about regional tariffs on local products. Iran suspended the project in April because of Renault's reluctance to export so many cars.

The French company's local representative Renault Pars is reported to have signed manufacturing agreements worth more than $600 million with local companies. Under the terms of the agreement, more than 50 per cent of the car parts are to be made inside Iran. AIDC is a joint venture between Iran's two existing car producers, Iran Khodro and Iran Saipa.

The agreement has been seen as one of the most positive business developments in Iran for months, coming at a time when international tension over Iran's nuclear programme has scared off some investors. Renault's investment in such a major deal is a show of confidence that could help bring some foreign investors back to the country, say analysts.

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