Motoring
French carmakers poised for scramble to reclaim Iran
* Peugeot, Renault officials attending Iran conference
* Foreign firms hope to revive Iran production
* U.S. companies remain barred for now
PARIS/DUBAI – Peugeot and Renault are among Western firms sending executives to an automotive conference that opens in Iran on Saturday – firing the starting gun on a more overt race for post-sanctions business.
The French carmakers are poised to resume vehicle sales in Iran, using a six-month easing of trade restrictions to reclaim their market position before the mass arrival of competitors behind any permanent detente that could follow.
Production by Iran’s domestic car industry, unusually developed for the Middle East, peaked at 1.6 million cars in 2011, the year crippling new sanctions were introduced. Leading manufacturer Iran Khodro accounted for about half of that output.
Khodro and No.2 manufacturer SAIPA have a handful of foreign production partners – including South Korea’s Kia, Suzuki Motor Corp. and the two French manufacturers – and exported some of their vehicles.
The conference in Tehran, planned before last weekend’s Iran nuclear talks breakthrough, includes representatives of German, South Korean and Japanese manufacturers on its billing.
Volkswagen, Suzuki, Kia and affiliate Hyundai all denied Iranian media reports that they were to attend, but Renault and PSA Peugeot Citroen confirmed they were sending representatives.
In return for undertakings by Tehran to freeze key parts of its nuclear programme, the so-called P5+1 powers agreed on Nov. 24 to a six-month suspension of trade sanctions on selected goods including auto parts.
The easing, due to start by early January, is good news for the French, which until recently shipped semi-built cars to Iran as component “kits” for assembly by local partners Iran Khodro and SAIPA.
U.S. carmakers meanwhile remain barred from Iran by domestic rules including a trade embargo that is not subject to any immediate relief.
POSITIONING
In the event of a sustained diplomatic thaw, Iran has potential to be a profitable, fast-growing auto market soon exceeding 2 million vehicles annually, analysts say.
“There’s enormous and immediate interest in Iran,” said Thierry Coville, an Iran specialist at IRIS, a French international relations think-tank.
Sanctions relief on autos brings tangible benefits to ordinary Iranians that may help President Hassan Rouhani win domestic backing for further concessions underpinning a definitive nuclear deal in six months, Coville said.
“It will have a pretty swift impact in a sector that is a big source of Iranian jobs – so this is more than just symbolic.”
More than 100,000 auto workers were laid off as sanctions hit Iran’s biggest manufacturing industry, with plants now running below half capacity, according to official data.
Combined with the steadily rising average age of vehicles on Iran’s roads, that spells enticing levels of replacement demand that could be unleashed if full market-opening were followed by the taming of inflation and a stronger rial.
Peugeot’s 458,000 sales amounted to a 29 percent market share at the 2011 peak, while Renault claimed 5.9 percent of national registrations. Former President Mahmoud Ahmadinejad drove a Peugeot 504.
But the significant tightening of U.S.-led sanctions on the oil industry and financial transactions has eroded production to 292,000 cars in the first half of the current Persian year, which began in March.
Western carmakers appear to have been positioning themselves for months ahead of an anticipated reopening.
“We haven’t been sitting on our hands,” a source close to Renault said, adding that some Iranian production was ongoing from stocks of components that pre-date June’s U.S. executive order halting parts shipments.
The French carmaker has been in talks for weeks on a resumption of deliveries, the source said.
Peugeot’s situation is more complex because shipments have been halted for longer – since February 2012 – and because the Paris-based carmaker is pursuing a strategic alliance with 7 percent-shareholder General Motors.
Peugeot hopes an easing of sanctions will restore the 150 million euros ($204 million) they wiped from profit, finance chief Jean-Baptiste de Chatillon told analysts this week.
“We would need several weeks to start up these operations again,” a company spokesman said. “But we’re not there yet.”
Peugeot insists it was financial sanctions that halted the trade, 14 months before Renault followed suit. But GM told investors it had received assurances that Peugeot would end Iran sales before approving their alliance.
U.S. CAUTION
The U.S. carmakers themselves may not be merely watching from the sidelines.
Ford and GM both deny knowledge of third-party importers that have sprung up in Iran to offer their vehicles online – alongside those of other major carmakers.
But Ford has been identifying potential distribution partners in Iran so that it can “move quite quickly” when the time comes, a source with direct knowledge of the matter said.
The company “continues to follow all legal requirements expected under the current sanctions regime and will monitor the situation carefully”, a Ford spokesman said, declining to comment on any preparations underway.
GM says it was not behind a recent Iranian advertising campaign for its cars, or a shipment of Chevrolet Camaros that arrived in the country earlier this year and were widely photographed by local media.
“We are a U.S. company and we adhere to U.S. laws and regulations as well as sanctions,” a GM spokesman said. “That’s why we don’t have any dealings with Iran.”
American carmakers, largely absent from Iran since the 1979 revolution, must tread with particular care to avoid riling the powerful U.S. pro-sanctions lobby or wider public opinion, still wary of the Islamic state’s ambitions.
“Those who think it’s open season on business in Iran are sorely mistaken,” a U.S. Treasury spokesman said this week. The government still owns about 2 percent of GM, a legacy of its 2009 bailout.
Still, the French may not have carte blanche to reclaim their former share of business. One complication may arise from the tough line taken by Foreign Minister Laurent Fabius in the final phase of nuclear talks.
Days before the deal, Paris and Tehran traded barbs after France had dismissed an earlier draft as too soft, ending the previous round of negotiations.
French government officials play down the fallout.
“I don’t think our intransigence has hurt us,” said one diplomat. “I spent three days with the Iranians and I didn’t sense they had any problem with us.”
Even so, Iran’s authorities may not want a return to business as usual.
Iran Khodro has said sanctions easing is an opportunity to add new production partners, diluting Peugeot and Renault.
Director general Hashem Yekeh Zareh also told Iran’s IRNA news agency the company was seeking greater self-sufficiency to put it beyond the reach of any future trade restrictions.
“We must ensure that shortcomings in our previous relationships with global car manufacturers are not repeated,” Zareh said, “so that issues such as sanctions cannot create challenges for the national car industry.”
– REUTERS
Motoring
FCTA Pulls Plugs On Taxi Rank, Terminal Services Contracts
The Federal Capital Territory Administration (FCTA) has ended contracts with taxi rank and terminal operators due to their failure to meet engagement terms and conditions.
Mr. Ubokutom Nyah, the Mandate Secretary of the Transportation Secretariat, FCTA, made this announcement during a meeting with managers of these terminals and taxi ranks in Abuja.
Nyah clarified that due to the operators’ failure to fulfill their engagement terms, the FCTA had to terminate their contracts.
He instructed them to transfer control of the ranks to the Administration within three months, starting from Nov. 21.
He lamented the presence of unauthorized motor parks in the city and assured the readiness of the Administration to establish proper taxi ranks and terminals in the capital.
He revealed that personally visiting the city’s taxi ranks, terminals, and unauthorized motor parks gave him direct insight into the poor condition of these facilities.
He emphasized that as the federal capital city, Abuja deserves better, highlighting that the poor condition of these facilities attracts various criminal elements.
He said “We must rid Abuja of all these. I have gone round the taxi ranks, and of all the places I visited, not one is worthy to be called even a village motor park.”
The Mandate Secretary stressed that the intention wasn’t punitive; rather, it aimed to revamp the sector, introduce new engagement terms, and modernize taxi ranks and terminals in the federal capital.
He also highlighted the plan to increase the number of terminals and ranks where necessary, which would positively impact the administration’s revenue.
He emphasized that this measure was part of a broader effort to eliminate illegal motor parks in Abuja and curb the associated criminal activities.
In response, Mr. Adebisi Lawal, the Operator of Jahi Taxi Rank, praised the administration’s initiative to modernize the taxi ranks and terminals.
Lawal urged the administration to prioritize current operators’ involvement in the selection of new developers for the modernization of the taxi ranks and terminals.
Motoring
Power Show Sees Soldiers Batter LASTMA Officer
It was a show of power at the Ojota area of Lagos on Monday as soldiers pummeled an officer of the Lagos State Traffic Management Authority, (LASTMA).
Eyewitness accounts claim that the ugly scene played out around 8am, and saw about eight soldiers pounce on the yet to identified LASTMA official, while his colleagues took to their heels.
The video of the melodrama has gone viral, where the LASTMA official was appealing to the soldiers, who appeared bent on ‘teaching him a lesson’.
This onslaught comes on the back of a reported assault of a soldier at the same location by LASTMA officials last week.
It would appear that what played out today was the army asserting its authority and defending their khaki as the armed soldiers carried out what looked like a revenge mission.
Eyewitnesses further averred that the victim was rushed to a nearby hospital, after the soldiers left the scene.
It was gathered that the authorities at LASTMA has reported the incident to the military authorities who are said to be looking into the matter.
Meanwhile many members of the public are rejoicing that the soldiers have taught the crude LASTMA official that power is stronger than power, for all their atrocities against motorists on Lagos roads.
Motoring
Intra-City Fares Skyrocket By 98% Month-On-Month – NBS
The impact of the removal of subsidy on Premium Motor Spirit (PMS), otherwise known as petrol, has seen the pump prices of the product skyrocket with a corresponding increase in the cost commercial transportation in Nigeria.
According to the National Bureau of Statistics (NBS), intra-city bus transportation fares across Nigerian cities, measured between May and June 2023, increased from N649.59 to N1,285.41 in June 2023.
This translates to 98 percent growth or N635.82 within the month in view.
The NBS made the data available in its Transport Fare Watch report for June 2023.
In the report, the NBS also shared the breakdown of bus journeys within the cities per drop for constant routes; bus journey intercity (state route); charges per person, amongst others.
On a year-on-year basis, the report has it that bus fares rose by 120.63 percent from N582.61 paid by commuters in June 2022.
The average fare paid by commuters for bus journey intercity per drop rose to N5,686.49 in June 2023 compared to N4,002.16 in May 2023 indicating an increase of 42.09 percent, month-on-month.
The report read, “The average fare paid by commuters for bus journeys within the city per drop increased by 97.88 per cent from N649.59 in May 2023 to N1,285.41 in June 2023.
On a year-on-year basis, it rose by 120.63 per cent from N582.61 in June 2022.
“In another category, the average fare paid by commuters for bus journey intercity per drop rose to N5,686.49 in June 2023, indicating an increase of 42.09 on a month-on-month basis compared to N4,002.16 in May 2023.
“On a year-on-year basis, the fare rose by 55.25 per cent from N3,662.87 in June 2022.”
Biztellers reported that the twin forces of forex pressure and increasing price of Brent in the global market would likely see the pump prices of petrol, increased again in no distant time in Nigeria.