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Automakers drool over Iran's nuclear deal, eased sanctions

| Saturday, Nov. 30, 2013, 8:00 p.m.

TEHRAN — The nuclear deal struck by Iran and six world powers will put more rubber on the road in the Islamic republic.

The country's major carmakers stand ready to start receiving parts again from French firms PSA Peugeot Citroen and Renault when the sanctions ease. That could cause Iran's stalled car production to take off, proving a boon to local automakers and potentially drawing more foreign investment from other manufacturers that hope to break into the market.

The nuclear deal struck in Geneva puts the brakes on the most sensitive parts of Iran's uranium enrichment program in return for relief from economic sanctions. The sanctions expected to lift include those affecting Iran's auto industry, its petrochemical exports, the sale of gold and other precious metals and the supply of spare parts for Iranian airplanes.

Iran's auto industry has been particularly hard-hit by the sanctions. Car production in Iran this year fell by 72 percent compared with 2011, when it produced about 1.6 million cars.

The sanctions relief, due to start in early January, allows for the French companies to resume auto parts to Iran's biggest carmakers Iran Khodro and SAIPA. About 100,000 Iranian auto workers have been laid off because of sanctions. Plants in the country now run at less than half their capacity.

Officials at an international automobile conference that began Saturday in Tehran welcomed the deal.

“Iran's global standing in car production, which was 13, has fallen (because of sanctions). I'm sure Iran will be able to compensate the fall of its share in the near future,” said Patrick Blain, president of the International Organization of Motor Vehicle Manufacturers. “International investors are expected to re-enter Iran's market soon.”

Iranian Industry Minister Mohammad Reza Nematzadeh said Iran's biggest carmakers are now holding talks with PSA Peugeot Citroen and Renault in Tehran for new joint venture projects and joint car spare parts production. That will greatly help Peugeot, Europe's No. 2 automaker, whose profits were hurt by the sanctions.

Peugeot sold more than 450,000 cars annually in Iran before the sanctions. Renault sold more than 100,000 cars in Iran in 2011 before pulling out.

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