Peugeot and Iran: A Legacy

Is Peugeot still in Iran?

Technically, no. As reported by Bloomberg, Reuters and the Wall Street Journal last year, Peugeot finally buckled to U.S. pressure by withdrawing from the Islamic Republic in 2018.

But in another crucial sense, Peugeot is still very much in Iran. After decades of investment, business dealings and joint ventures with regime entities, the French car giant cannot extricate itself so easily.  Its legacy lives on – even if it might prefer to wash its hands of the whole shoddy business.

We are not just talking about the hundreds of thousands of Peugeot cars on Iran’s roads – Peugeot had 34% market share in 2017.

No – the situation that Peugeot now faces is having its badges slapped on the grilles of cars produced by a homegrown Iranian carmaker with ties to the Foreign Terrorist Organization, the Islamic Revolutionary Guards Corps (IRGC).

Even though Peugeot is officially ‘out,” and even though the Iranians are incensed at what they see as a betrayal by Peugeot, Iran Khodro Company (a/k/a/ IKCO) will be adorning its cars with the famous heraldic lion.  According to the Tehran Times, IKCO’s former chief “Yekkeh Zareh insisted that the car will keep the logo and name of France’s Peugeot despite the fact that the company reneged on its promises and left the Iranian market in June 2016.”

Clearly, the Iranian ministerial classes and economic elites have not allowed their righteous anger at Peugeot’s ‘economic terrorism’ to cloud their better business sense. After all, a world-respected European brand is likely to have more cachet than a domestic Iranian producer tied to a Foreign Terrorist Organization.

So what does Peugeot think of this brazen theft of intellectual property? It is not clear, and they certainly won’t tell us.

United Against Nuclear Iran (UANI) has sent eleven letters to Peugeot since 2012 – we have never received a single response.

UANI’s key cause for concern has always been Peugeot’s partnership with Iran Khodro, which is owned by the Iran Development and Renovation Organization (IDRO). IDRO is itself blacklisted and tied to Iran’s terrorist division, the IRGC.

Apart from the troubling prospect of helping line the pockets of the IRGC for it to spread chaos and terror around the Middle East through its terrorist proxies, UANI also presented Peugeot with a clear choice: you can either do business in the United States, or in Iran. But not both.

At the time of our first letter 2012 - although Peugeot has been out of the U.S. market since 1991 - Peugeot had just formed an alliance with Detroit’s General Motors, itself part-owned by the U.S Government after its multi-billion dollar bailout.

While that alliance quickly ended, Peugeot is now ready to jump into the U.S. Last year, parent group PSA announced the launch of a brand new North American headquarters in Atlanta, Georgia. This would be “[t]he latest step of its 10-year plan for a progressive entry of Groupe PSA into [the] North American market.”

Will American car-buyers in the coming years be content to forgive and forget Peugeot’s history of Iranian entanglement – when U.S. advocacy groups were telling Peugeot repeatedly over the course of 8 years about Iran’s true nature? Many will, of course, but it’s hardly a good look that branding consultants will be highlighting, particularly in a hypercompetitive sector of the economy in which consumer sentiments can easily turn on such things.

And none of this will be helped by Iran Khodro’s latest decision to affix the Peugeot lion emblem to cars for presumably years to come. Even the Iran Khodro website still offers a range of gleaming new Peugeot models for sale. A member of the public looking at that website would come to the conclusion that Peugeot is still very much in Iran. This legacy could prove costly.

All this should serve as a caution to a newly launched car company from South Africa, Mureza Auto Company. They too are willing to partner with another IDRO-owned Iranian carmaker, SAIPA (itself formed from a tie-in with French carmakers).

SAIPA too has a shocking reputation aside from its ties to IDRO. One SAIPA model alone is responsible for one third of all road traffic fatalities in Iran since 2008, a statistic that compelled Iranian MP Bahram Parsaei to call them “chariots of death.” Other reports have pointed to widespread corruption and financial mismanagement at the company – not surprising in a country ranked 138 out of 180 in Transparency International’s ‘Corruption Perceptions Index.’ UANI has recently conveyed these concerns to Mureza and hopes it will take the responsible course.

“It takes a lifetime to build a reputation and five minutes to ruin,” as Warren Buffet has pointed out. While Peugeot’s brand—built over 200 years with massive state support as one of France’s ‘national champions’—will likely survive despite the unnecessary battering it continues to take over its Iran dealings, just five minutes with Iran’s automakers could easily ruin Mureza’s reputation before it has even had a chance to build one at all.