Iran Khodro says coping with Peugeot exit
Iran’s main automobile company, Iran Khodro, says it is coping with a decision early this year by troubled French car maker Peugeot to halt exports of vehicle kits for assembly, according to reports on Wednesday.
“Iran Khodro has managed to become self-sufficient in producing 90 percent of the parts for the (popular Peugeot model) 206, and an effort is being made to use local suppliers for parts that were previously imported,” Hossein Najari, Deputy CEO for production was quoted as saying.
Peugeot’s parent company PSA Peugeot Citroen in February suspended its sales of car assembly kits to Iran, which had been its top export market in terms of trade volume up to then.
The decision appeared to be tied to Peugeot’s alliance with U.S. group General Motors, and U.S. sanctions pressure on Iran.
PSA Peugeot Citroen on Wednesday announced it will seek to cut 1.5 billion euros ($1.8 billion dollars) in costs over the next three years after declaring a 819-million-euro ($989-million) loss for the first half of 2012.
Its exports to Iran, where locally assembled versions of its 405 and 206 models are prevalent on the roads, represented up to 800 million euros in revenue per year before they were suspended, according to figures given in Tehran.
The maker of two-thirds of France’s cars is in a tailspin as a deepening recession in many markets in Europe takes its toll on its business — Europe is Peugeot’s main market. The company’s share price has more than halved since March.
The first-half loss contrasts starkly with a profit of €805 million in the same period last year and came on the back of a 5.1 percent fall in revenue to €29.6 billion.
The company doesn’t expect Europe to pick up anytime soon, saying Wednesday that it expects its European market to contract by 8 percent this year.
In response, Peugeot announced earlier this month that it would close a major factory in France and cut 8,000 jobs — part of a plan to save €2.5 billion by 2015. Those savings will also come from efficiencies gained by an alliance with General Motors. About half — €1 billion — of those savings will come this year alone.
“The group is facing a difficult time,” Chairman Philippe Varin said. “The depth and persistence of the crisis impacting our business in Europe requires the launch of the reorganization of our French production and a reduction in our structural costs.”
But the company’s cost-cutting plans have run afoul of President Francois Hollande’s Socialist administration, which has said the restructuring is unacceptable and that it will force Peugeot to save some of the jobs it wants to eliminate.
On Wednesday, the government will unveil a plan to support the auto industry — part of its carrot-and-stick strategy with Peugeot. It’s expected to give incentives to French consumers to buy French cars and to support the clean-energy vehicles that the company excels at.
But much of Peugeot’s problems stem from an over-supplied European car market, and it’s unclear how much the government can do for the company. France’s car industry was already given a bailout under former President Nicolas Sarkozy.
- Sanctions on Iran force French auto job losses (alethonews.wordpress.com)
- Peugeot First-Half Profit Plunges on Europe Sales Decline – Bloomberg (bloomberg.com)
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