Iran and France Sign Biggest Joint Venture Deal on Car Parts Production

According to a report by IFP, France’s Faurecia has signed two joint venture agreements with Iranian companies to expand its presence in the local market as projections predict Iran’s car market to expand dramatically as new models enter the market.

Faurecia’s second Iranian joint venture agreement brings the latest emissions controls technology to the country and help curb the worsening air pollution in almost all urban areas due largely to the gasoline, CNG and diesel vehicles.

The joint venture called Faurecia Crouse Advanced Exhaust System (FCAES) was signed on December 2 in Paris between Faurecia and Crouse-MAAD Iran, an Iranian conglomerate.

The FCAES-MAAD Iran deal will develop and produce emissions control systems for the Iranian automotive market and can be sold to local car producers.

The new program will reportedly be a 50-50 split between both companies, Reuters reported.

It will cover both hot end and cold end emissions control systems, based on Euro 5 standard, with first local production scheduled to start at the end of 2017. Total sales are expected to reach $53 million in 2020, representing a 25% market share.

The Euro 5 standard came into effect in the European Union in 2009, but manufacturers had till 2011 to meet the new regulations. The Euro 5 rules further tightened limits on particulate emissions from diesel engines with cars needing new particulate filters.

The Euro 5 standard also adds extra emphasis to petrol engines with injectors that also must have particulate filters fitted to their engines.

Meanwhile, another joint venture signed by the company and Iran’s Azin Khodro, is to help local car companies develop better vehicle interiors.

The 50/50 Faurecia–Azin Khodro joint-venture for vehicle interior systems will develop and manufacture instrument panels, door panels, centre consoles, acoustic and soft trim modules, with production to start in early 2018. The new JV called AFISCO expects its total sales to reach $53 million in 2020.

FAPSCO, the existing Faurecia JV for automotive seating, will expand its full seats, frames and covers activities beyond its current customer, Renault, and extend to Peugeot, Iran Khodro, and other automakers, Financial Tribune reported.

FAPSCO expects to grow its business to 340,000 cars per year and total sales of $159 million in 2020. With this third joint-venture, all three Faurecia business groups will be present in Iran.

Earlier in October, Faurecia CEO Koller had this to say about the Iranian automotive sector: “When you visit the plants in Iran, they clearly have not had the opportunity to make the investments because of sanctions, but these guys are good.”

He insisted Faurecia enjoyed “healthy business relationships” with its partners in Iran and maintained it was “in the interest of the US to have Iran as an ally.”

Faurecia estimates Iran’s auto production to grow from 1 million vehicles in 2015 to 1.8m by 2025, representing an average growth of 6% per year.