PSA Winds Down Operations in Iran, Again

PSA Group says it has begun to shut down its ventures in Iran and will exit the market by Aug. 6 unless its can get a waiver from new U.S. economic sanctions imposed on the country.

The decision comes after President Donald Trump pulled the U.S. out of the Iran nuclear agreement. He considered the current pact “horrible” and declared a return to sanctions in hopes of strengthening the deal.

PSA agreed in 2016 to invest €400 million ($469 million) by 2020 in a 50:50 joint venture with long-time partner Iran Khodro to revive operations in the country following the previous four-year round of sanctions. PSA sold 445,000 previous-generation cars in Iran last year.

French rival Renault SA faces a similar decision. Last August the company announced plans to open an assembly plant and engine factory in Iran to make and power 150,000 cars per year. The facilities were to be built through a joint venture with Iran’s Industrial Development & Renovation Organization.

The plants would buttress Renault’s local production of its Logan car and light-duty pickup truck variant, and the Sandero small car and Stepway mini-crossover vehicle. Renault’s sales in Iran doubled to 108,500 units in 2016 and were expected to double again last year.