Analyst Insight by Justinas Liuima - Industry Analyst
The French car industry is heavily reliant on Europe and so was particularly adversely impacted by the economic downturn in Europe. However, French producers are exploring new opportunities in the Iranian market after Iran pledged to freeze its nuclear programme.
New Opportunities in Iran
Following Iran’s pledge to freeze its nuclear programme, trade sanctions were temporarily lifted for six months in November 2013. The sanctions were eased for a list of selected goods, including car parts. However, the easing is only now beginning to take full effect.
Car production in Iran peaked at 1.4 million cars in 2011 (a large share of which was exported to the Middle East), the same year when trade sanctions were imposed. Total car sales in Iran now stand at more than 700,000 units annually, with the market’s potential remaining significant.
Following easing of the sanctions, car sales in Iran could grow by at least 50% to 2020 to reach 1.5 million units, said the CEO of Renault, Carlos Ghosn, at the World Economic Forum in Davos. This could be good news for French producers which once held a dominant share of the Iranian car market.