Volvo halts Iran truck assembly as US sanctions hit payment
Swedish truckmaker Volvo has stopped assembling trucks in Iran because US sanctions against the country are preventing it from being paid, a spokesman for the company said yesterday.
The sanctions against Iran - reimposed on August 6 by US President Donald Trump after his controversial decision to pull out of a nuclear deal with Tehran - have forced companies across Europe to reconsider their investments there.
Volvo spokesman Fredrik Ivarsson said the trucks group could no longer get paid for any parts it shipped, and had therefore decided not to operate in Iran.
It's another blow to the country's car industry which, unlike the energy and banking sectors, had managed to sign contracts with top European firms.
"With all these sanctions and everything that the United States put in place... the bank system doesn't work in Iran," said Mr Ivarsson.
"We can't get paid... So for now we don't have any business (in Iran)."
Before the sanctions were reimposed, Volvo had expressed an ambition for Iran to become its main export hub for the Gulf region and North Africa markets.
The European Union has implemented a law to shield its companies, but the sanctions have deterred banks from doing business with Iranian firms as Washington can cut off from the US financial system any that facilitate such transactions.
Volvo was working with Saipa Diesel, part of Iran's second-largest carmaker Saipa, which was assembling the Swedish firm's heavy-duty trucks from kits shipped to Iran. Mr Ivarsson said Volvo had no active orders in Iran as of yesterday.
More than 3,500 Volvo trucks had been assembled by Saipa Diesel in the year to May, but none had been assembled in this financial year - although the original deal was for at least 5,000 trucks, a manager told Reuters.