Opel Helps France's PSA Buck China, Iran Auto Downturn

French auto giant Groupe PSA, which makes the Citroen and Peugeot brands, reported record vehicle sales Tuesday as the acquisition of General Motors' Opel unit helped offset a sharp downturn in key markets China and Iran.

PSA sold 3.88 million vehicles, up 6.8 percent from 2017 when it acquired the Opel business which includes British-based Vauxhall.

PSA said that without the Opel contribution, 2018 sales would have been down 12 percent despite a strong showing in Europe.

Ranked second in Europe after Germany's Volkswagen, PSA said it did well last year to increase overall sales "for a fifth consecutive year... against a background of adverse economic and geopolitical winds."

The company failed, however, to hit the overall target of four million vehicles it had set, largely due to the impact of fresh sanctions imposed on Iran by US President Donald Trump and a slump in China.

PSA announced in June that it was suspending operations in Iran, where it would have expected sales of 300,000 vehicles.

In China, PSA said sales plunged more than 34 percent in an overall market down nearly six percent.

Total sales in China and Southeast Asia fell for a fourth consecutive year to 262,600.

PSA and its Chinese partner and major shareholder Dongfeng, sold 740,000 vehicles in China in 2014 and had targeted one million for last year.

The company said early last year that it hoped that new SUV models and upgrading its distribution network would boost sales in China.

In Europe, PSA said sales jumped 30.6 percent to 3.1 million vehicles, accounting for 80 percent of the total compared with 65 percent in 2017.

The Opel and Vauxhall brands chalked up sales of around one million vehicles.

Photo Credit: IRNA

European Losers in New Iranian Sanctions Game

US President Donald Trump's decision to pull the United States out of the 2015 nuclear accord with Iran and reimpose a raft of sanctions will hit European businesses working in Iran. Here is an overview of how firms stand to be affected when the sanctions kick in Monday:

Auto

French automakers Renault and PSA have taken different approaches publicly. PSA, behind the Peugeot, Citroen and Opel brands, said in June it was preparing to suspend activities in the Islamic republic, its chief foreign market by volume, noting those units account for "less than one percent of sales."

The group, which is Europe's second biggest carmaker, last year sold more than 445,000 vehicles in Iran, making the country one of its biggest markets outside France.

Renault says it intends to keep up activities in Iran albeit scaling them back. On July 16, the automaker announced a 10.3 percent drop in sales in Iran to 61,354 units.

Germany's Daimler was teaming up with two Iranian firms to assemble Mercedes-Benz trucks.

Volkswagen also said last year it would seek to resume sales in Iran for the first time in 17 years, yet the scale of its US activities could force the jettisoning of those plans. 

German firms' business with Iran was a modest USD 2.6 billion of 2016 exports rising to 3.0 billion last year. Italy is Iran's main European trading partner -- but Germany is still the bloc's biggest exporter to Tehran.

Aviation

Aviation saw beefy contracts drawn up following the nuclear accord as Iran targets modernization of an aging fleet.

Airbus booked deals for 100 jets although to date only three have been delivered after having US licenses bestowed upon them -- a necessity given some parts are US-made.

The potential loss of business in Iran would not weigh overly heavily on Airbus as overall orders on its books at the end of June stood at 7,168 planes. Franco-Italian planemaker ATR was fretting on the fate of 20 planes earmarked for Iranian delivery -- though Iran Air said Saturday five ATR-72600 aircraft would arrive Sunday, creeping under the deadline to add to eight already delivered.

Oil

French energy giant Total has moved away from a contract to develop an offshore gas field at South Pars in what would have been the first project of its kind since the 2015 nuclear deal.

Because Total's investment in the field had barely just begun, the company is avoiding incurring significant losses on a $5 billion project which Iran says Chinese group CNPC will now take up. 

After a 30 percent jump in 2016 in exports of Italian-made goods to Iran, Italian exports grew 12.5 percent last year to 1.7 billion euros, according to official data.

But energy giant Eni has held back on returning to Iran, preferring to wait on the impact of the latest sanctions.

Britain's BP, which started life as the Anglo-Persian Oil Company, has no presence in Iran. Although Anglo-Dutch giant Royal Dutch Shell signed a deal in 2016 to explore possible investments it does not currently have any operations on the ground. 

Railways and Shipbuilding

Italy stands to lose out in these sectors with national railway operator Ferrovie dello Stato Italiano having signed a deal to build a high-speed line linking Qom to Arak in northern Iran.

Shipmaker Fincantieri, engineering firm Maire Tecnimont and gas boiler maker Immergas has also signed a string of deals with Iran which now are also threatened.

Tourism

British Airways and German carrier Lufthansa face having to stop only recently resumed direct flights to Tehran or face losing Transatlantic business.

The dilemma applies to French hotel chain AccorHotels, which opened an establishment in Iran in 2015, as well as to Emirati group Rotana Hotels, which has designs on its own Iranian operation.

Spain's Melia Hotels International chain, which signed a 2016 deal to run a five star hotel in Iran, the Gran Melia Ghoo, says the establishment is under construction and that discussion of its future is "premature."

Industry

Siemens returned to Iran in 2016 seeking to sell gas turbines and generators for electricity stations and has won a contract to sell compressors for a natural gas processor.

"The mega contracts hoped for when sanctions were lifted were never realized," KPMG advisor Kaveh Taghizadeh was recently quoted as saying in Stern magazine.

"Siemens will continue to ensure it remains in strict compliance with relevant international export control restrictions and all other applicable laws and regulations, including US secondary sanctions," Siemens spokesman Yashar Azad told AFP.

He added Siemens "will take appropriate actions to align its business with the changing multilateral framework regarding Iran." French industrial gas group Air Liquide says it will "cease all commercial activity" in the country although a spokesperson says the firm has "no investments" there.

Pharmaceuticals

Pharmaceutical giant Sanofi, in Iran for over a decade, remains operating "in full compliance with international regulations", a spokesman said, while adding "it is still too early to comment on the potential impact" of sanctions.

Banks

Germany's big banks, Deutsche Bank and Commerzbank, stayed clear of Iran after the US fined them hugely in 2015 for violating previous sanctions. Regional banks Helaba and DZ Bank pulled out of Iran after the US announced it was reimposing sanctions.

Photo Credit: Scania

Iran Urges Foreign Firms to Resist US Sanction 'Threats'

Tehran on Saturday urged foreign firms working in Iran to resist US "threats" of sanctions, adding it was in talks with French car makers about staying on in the country.

"All (foreign) companies working in Iran should not be intimidated by US threats and should continue their activities in Iran," Industry Minister Mohammad Shariatmadari told a news conference in Tehran.

"All those who do not do this, we will replace them. There are others who
will invest in Iran," he said. 

When asked specifically about the case of French vehicle manufacturers PSA—maker of Peugeot, Citroen and DS—and Renault, Shariatmadari said: "Until now, they have not told us that they are not continuing" their business in Iran. 

"They are continuing their cooperation. So far, we are talking (with these groups) and there is nothing new," he said. 

US President Donald Trump announced on May 8 that Washington was withdrawing from the 2015 Iran nuclear deal, effectively starting a countdown for the reimposition of sanctions lifted under the accord. 

Sanctions on the automobile sector are set to be reinstated on August 6.

PSA, through its automotive equipment subsidiary Faurecia, and Renault, through its alliance with Japanese manufacturer Nissan, could take a heavy hit from the reimposed penalties.

Between the two, Renault and PSA sell nearly half of all new cars registered in Iran. 

With the deadline looming, the two French groups have adopted different communication strategies. 

In early June, PSA announced it had "begun the process of suspending the activities of its joint ventures (in Iran) in order to comply with US law by August 6, 2018."

The majority of the company's French employees in Iran have already left the country. 

Renault, on the other hand, has ambiguously said it would not abandon its activities in Iran, but would "sharply reduce operations" in the country without endangering the company's "interests."

Photo Credit: IRNA

Most French Firms 'Won't Be Able to Stay' in Iran: Minister

Most French companies hoping to keep doing business in Iran after the US imposes new sanctions on the country will find it impossible to do so, Finance Minister Bruno Le Maire said Tuesday.

These companies "won't be able to stay because they need to be paid for the products they deliver to or build in Iran, and they cannot be paid because there is no sovereign and autonomous European financial institution" capable of shielding them, Le Maire told BFM television.

The new sanctions announced by US President Donald Trump in May after he pulled out of a 2015 nuclear deal with Tehran would punish any foreign firm operating in Iran which also does business with the US or in dollars.

"Our priority is to build independent, sovereign European financial institutions which would allow financing channels between French, Italian, German, Spanish and any other countries on the planet," Le Maire said.

"It's up to us Europeans to choose freely and with sovereign power who we want to do business with," he added. "The United States should not be the planet's economic policeman."

Le Maire and his EU counterparts have been trying to secure exemptions for their firms, many of which rushed back into Iran after the landmark accord curtailing Tehran's nuclear program.

But French oil group Total and carmaker PSA have already indicated they are unlikely to stay in the country, while Renault has said it will remain despite the sanctions—though it does not sell its cars in the US.

Analysts have warned it would be nearly impossible to protect multinationals from the reach of the "extraterritorial" US measures, given the exposure of large banks to the US financial system and dollar transactions.

The first round of the new sanctions, targeting Iran's auto and civil aviation sectors, are scheduled to go into effect on August 6.

Photo Credit: Wikicommons

French Carmaker PSA Says to Exit Iran Over US Sanction Risk

French automaker PSA said Monday that it would pull out of two joint ventures to sell its cars in Iran to avoid the risk of US sanctions after Washington withdrew from a key nuclear deal with Tehran.

"The group has begun to suspend its joint venture activities, in order to comply with US law by August 6, 2018," the maker of Peugeot and Citroen cars said in a statement.

European officials have vowed to try to shield their companies working in Iran from the reach of punishing US sanctions that are set to come into effect by November.

But with US President Donald Trump showing little inclination to spare EU companies, they must decide whether to continue to work in Iran if doing so puts their US operations at risk of huge fines.

PSA, Europe's second-biggest carmaker, signed deals with two Iranian automakers, Iran Khodro and Saipa, in 2016 after sanctions were lifted following the landmark 2015 accord aimed at prevent Tehran from developing nuclear weapons.

It was among several companies which rushed into Iran, hoping to meet pent-up demand in a country that had been squeezed by sanctions for years.

Last year PSA sold nearly 445,000 vehicles in Iran, making the country one of its biggest markets outside France.

Although it has been absent from the US market since 1991, the company said in January that it was hoping to launch a car-sharing service in one or two American cities.

But PSA, which also owns the Opel and Vauxhall brands, also noted that Iran sales still make up less than one percent of its total sales, and so exiting the country would not alter its financial guidance.

"With the support of the French government, Groupe PSA is engaging with the US authorities to consider a waiver," it said.

Yet the CEO of French oil giant Total, who was hoping to launch a major natural gas project in Iran, said last week that the chances of winning exemptions to the US sanctions were "very slim."

Photo Credit: IRNA