Volvo Finds Exit Ramp from Iran Market

[kscarbel]

Volvo Finds Exit Ramp from Iran Market

February 13, 2013 / The Wall Street Journal

Volvo Group has left the Iranian market. A company spokesman confirmed the authenticity of a letter sent to a U.S. pressure group this week saying it stopped sales of any new trucks in Iran in March 2012, and made a decision in January to stop business with all companies in the country.

The question of pulling out of Iran has been an issue under discussion for several years, said Kina Wileke, Volvo’s head of media relations. Concerns about the Iranian regime led Volvo to pull out, she added.

United Against Nuclear Iran, the U.S. pressure group, sent a letter to Volvo in December calling for Volvo to leave the market, accusing it, among other things, of supplying the trucks used by the Iranian government to transport missiles.

“We applaud Volvo AB for this decision,” said Nathan Carleton, a spokesman for the group, in an email. “Iran’s automotive sector serves as a massive source of revenue for the regime, and is integral to Iranian military operations…The situation is now changing, as seven prominent automakers have pulled out of Iran within the past year.”

The letter, dated Feb. 12 and signed by Eva Persson, executive vice president of legal and compliance for Volvo, takes issue with the allegations the group made in December, and offered clarification on “statements which we do not believe to be accurate.”

Persson said in the letter that Volvo has done business in Iran since 1934, but it represents a minute portion of the company’s global operations. Due to the decision in March 2012 to limit its business to fulfilling existing contracts, sales to Iran made up less than 0.1% of total company turnover that year, the letter said.

“We note that no U.S. entities or U.S. persons have been involved in the Volvo Group’s previous sales to Iran in violation of any sanctions regimes,” the letter said.

Persson said in the letter that Volvo provided commercial trucks to Iran through two subsidiaries, Volvo Trucks and Renault Trucks.

They were delivered as SKD kits to Volvo’s importing distributor Saipa Diesel Co., which Perrson said in the letter isn’t an entity under sanctions, nor is it “as far as we are aware” a subsidiary or controlled by the Industrial Development and Renovation Organization of Iran, or IDRO, which is on a U.S. blacklist.

“It is our understanding that IDRO is only a minority shareholder in one of Saipa Diesel Co.’s minority shareholders, Saipa Car Manufacturing Co.,” the letter said.

In order for Saipa to assemble the SKD kits and be able to service and maintain the trucks, Volvo provided tools and know-how in the same way it has in other countries, the letter said.

“No dual-use technology is or has been transferred to Saipa Diesel Co. as a result of the tools or know-how provided to it,” the letter said.

It also detailed how Volvo’s construction equipment division sold excavators, wheel loaders and other construction equipment, and another division sold Volvo industrial engines, to an independent importer. But that importer isn’t subject to asset freezes under U.S. or European Union regulations, and the products were not barred under trade control laws, the letter said.

[kscarbel]

Why has pulling out of Iran been a question for Volvo? It's something they should have done long ago without any second thoughts.

“as far as we are aware”, our Iranian distributor is not an entity controlled by the Iranian regime. “It was our understanding" the government dept. IDRO was only a minority shareholder. Yeah, right. They knew for years, but looked the other way.

Iran only represents a minute portion of Volvo's business? Then why do a significant portion of heavy trucks in Iran carry the Volvo nameplate? Certainly, many are second-hand trucks from Western Europe. Volvo had profited significantly in truck and parts sales (and worked hard to keep that off the U.S. government's radar).

The more you read, the dirtier it gets.

_________________________________

In a letter sent to AB Volvo President and CEO Olof Persson, UANI CEO and U.S. Ambassador to the United Nations Mark D. Wallace wrote:

Volvo subsidiaries Volvo Trucks and Renault Trucks are partnered with the Iranian entity Saipa Diesel, a subsidiary of the Industrial Development and Renovation Organization of Iran ("IDRO").

As you may know, IDRO has been sanctioned by the U.S. and EU for its proliferation activities and ties to the Islamic Revolutionary Guard Corps ("IRGC").

Nevertheless, as part of its partnership with Volvo, Saipa Diesel manufactured some 2,366 Volvo FH-series and 632 Renault Midlum trucks in 2010 alone.

In addition, Renault Truck's website details ongoing plans for Saipa Diesel to produce 1,800 Renault trucks annually.

UANI is also concerned that Volvo's business with IDRO-affiliated entities has resulted in the transfer of dual-use technologies to the Iranian regime. For example, the Volvo Trucks website, states that Volvo has "contributed significantly with investments in tools and equipment" to its Iranian partners.

Moreover, evidence of the regime's misuse of Volvo equipment and technology by Iranian military and security forces has been widely documented. The enclosed photograph of a Volvo FH12-420 transporting Iranian MIM-23 surface-to-air missiles during the 2011 Sacred Defense Parade is clear evidence.

In addition, UANI is concerned by the fact that Volvo subsidiary Volvo Construction Equipment ("VCE") has partnered with Parsian Pishro Sanat to provide heavy construction and mining machinery to Iran. UANI's concern is heightened by Iran's ongoing attempts to evade monitoring of its nuclear activities by constructing heavily fortified and clandestine nuclear facilities such as the Fordow facility outside the city of Qom.

Furthermore, UANI is troubled by the activities of Volvo Penta in Iran. Volvo Penta produces a number of sensitive products for the marine propulsion industry, including gas turbines for naval vessels, and lists multiple offices and dealers in Iran. Volvo Penta's Iran business is particularly troubling given that Iran’s naval forces have been reported to utilize vessels outfitted with Volvo Penta's marine diesel engines (The U.S. Navy sends Volvo their regards).

______________________________________

AEI – Global Business in Iran Database

Since the fall of Iran, Volvo has sold 40,000 trucks. In 2000, Volvo signed a new agreement with Saipa aimed at manufacturing 1,500 trucks in Iran a year. Sales have totaled 4,000 to 5,000 trucks a year. Volvo also owns a 30 percent stake in Saipa’s Zamyad factory, located near Tehran.

1. "Volvo Trucks Signs a New Agreement in Iran", Business Wire, 23 March 2001, available at http://www.encyclopedia.com/doc/1G1-72075017.html.

2. "Volvo Trucks Iran", Volvo, accessed 26 January 2010, available at http://www.volvo.com/trucks/iran-market/en-ir/aboutus/volvo_in_Iran/volv....

[kscarbel]

After the Iranian army publicly displayed Mercedes-Benz trucks converted into mobile rocket launchers, the German Economics Ministry in April 2008 banned the export of "trucks with three or more axles and a gross vehicle weight over 44,000 lbs to Iran (and Syria).

Understanding the need to be politically correct, Daimler banned vehicle exports altogether to Iran in April 2010 (much to Volvo’s satisfaction).

I like the way Volvo, with a large U.S. footprint, attempts to cover themselves with the U.S. government by stating, “We note that no U.S. entities or U.S. persons have been involved in the Volvo Group’s previous sales to Iran in violation of any sanctions regimes.” It's like saying, "we're not at fault because we know how to and did legally play both sides of the court."

Despite the escalating nuclear threat, Volvo steamed full speed ahead in Iran. Such low ethics and values speak for themselves. Do you really want to support this foreign company which has supported the growth of a nuclear Iran (a scary thought for all Americans), and buy their Mack-branded Volvo trucks? Think about it long and hard.

Interestingly, Volvo's Iran partner Saipa is also the distributor for China's Dongfeng truck brand, whom Volvo just bought a 45% minority interest in (As Volvo can tell you in the case of Iran Saipa, you can always plead some degree of ignorance with a minority share if the deal goes politically sensitive). If you've long wanted to invest in Iran and China but couldn't find the ideal investment vehicle, you could have been buying Volvo stock (OTC symbol VOLVY).

[RFCDrum]

I like the cast spokes on the FH.