SAIPA Hands Over Bonro Factory to Renault

As per the trilateral deal between Renault, IDRO and Negin Khodro, the Bonro production facility has been handed over to the French car company,” IDRO chief Mansour Moazemi was quoted as saying by the Persian-language Donya-e-Eqtesad, the sister publication of the Financial Tribune. Renault was not available for comment.

The French automotive giant signed a €660-million agreement with IDRO and Negin Khodro last August according to which IDRO was to handover the factory in Saveh to Renault.

The Saveh production facility is located in Markazi Province. The province’s Governor Ali Aghazade says, “The launch of Renault operations in Saveh will contribute to the province’s economic progress and industrial development.”

However, the latest reports confirm that the production plant is still owned by SAIPA and the transfer of its ownership rights to Renault remains a bone of contention between IDRO and SAIPA with the latter under former director Mehdi Jamali insisting that IDRO has no legal claim to the production site.

IDRO is the main shareholder in SAIPA and the automotive company’s CEO, as a rule, is appointed by the IDRO director. Furthermore, according to Moazemi, SAIPA owes 8 trillion rials ($2.3 billion) to IDRO and the organization has agreed to forfeit the debt in return for the Bonro ownership.

In Nov. 2017, IDRO fired Jamali and replaced him with Mohsen Jahrodi as head of SAIPA. Two months later in January Jahrodi said, “Regarding the Bonro production plant, SAIPA will do as IDRO wants. Whatever decision the organization makes SAIPA will comply.”

However, Jahrodi seems to have had a change of heart in recent weeks. The SAIPA chief now says, “We have set conditions and demands for transferring Bonro’s ownership to Renault. If these demands are met we will go ahead.” He did not say what the demands are. 

Jahrodi has said, “Negotiations are being held between Renault and SAIPA.” 

Informed sources have told Donya-e-Eqtesad that SAIPA has demanded production rights of two Renault models namely the Kwid and New Symbol in return for transferring ownership of Bonro.

Speaking on condition of anonymity, they said Renault and IDRO have agreed to meet SAIPA’s demands. The two models are to be manufactured by the carmaker in Iran as part of its agreement with IDRO.

Reportedly Symbol was to be priced less than 650 million rials ($14,000) and the Kwid was to come with a price tag of under 400 million ($8,700). In the international market, Kwid and Symbol sell for $7,500 and 13,000. Given SAIPA’s notorious price gauging ways how much the two cars will cost.

The Kwid is a small city car and Renault’s winning card in emerging auto markets like India, Brazil and Iran. The agreement with SAIPA has not been confirmed yet but market observers have started speculating whether or not Renault will manufacture Kwid in Iran or will change its plans and replace it with another model.

Currently, SAIPA produces Pride pickup and a Chinese derived sedan model Ario at the production site.

Operational by March

Earlier last week IDRO chief told local media that “The trilateral deal will be implemented by March.”

Moazemi said, “The deal has been delayed because IDRO could not meet its contractual obligations. As per the deal, we agreed to hand over the Bonro production site in the city of Saveh to the French company. But we have not been able to do so.”

He went on to say that “IDRO is following up the matter and will come to a conclusion soon.” Informed sources with IDRO have told Donya-e-Eqtesad that SAIPA and IDRO have reached an agreement over the matter and the production facility will be handed to Renault soon. 

Renault is the second largest foreign carmaker present in Iran in terms of market share following its arch-rival PSA Groupe. Renault has reported that it sold 162,079 vehicles in Iran in 2017, which accounts for 79.7% vehicles sold by the auto giant in the Middle East. 

PSA is the leading foreign auto company present in Iran in terms of market share. It sold 444,600 cars in Iran in 2017 under Peugeot license owned by Iran Khodro accounting for a 40% of the local market.

Currently, two Renault models, Logan and Sandero, are produced in Iran by local carmakers IKCO and Pars Khodro. In addition to domestic production, several Renault models are offered by Negin Khodro in the local market through Imports.