Swedish truckmaker AB Volvo <VOLVb.ST> has stopped assembling trucks in Iran because U.S. sanctions are preventing it from being paid, a spokesman for the company said on Monday.
The sanctions against Iran, reimposed on Aug. 6 by U.S. President Donald Trump after his 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 in 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. We can’t get paid … So for now we don’t have any business (in Iran),” Ivarsson told Reuters by telephone.
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 any that facilitate such transactions off from the U.S. financial system.
Volvo was working with Saipa Diesel, part of Iran’s second-largest automaker SAIPA, which was assembling the Swedish firm’s heavy-duty trucks from kits shipped to Iran.
The head of Volvo Trucks was reported to have told Iranian media that he expected 5,000 Volvo trucks to be assembled locally in the year to March 2019 and that Saipa Diesel would begin to produce three Volvo truck models domestically.
Ivarsson did not know how much of this target had been delivered on. However, he said Volvo had no active orders in Iran as of Monday.
Reuters could not immediately reach Saipa Diesel for a comment.
Swedish truckmaker Scania, which is owned by Volkswagen <VOWG_p.DE>, said it had cancelled all orders that it could not deliver by mid-August due to sanctions, while French carmaker PSA Group <PEUP.PA> began to suspend its joint venture activities in Iran in June.
Germany’s Daimler <DAIGn.DE> has said it is closely monitoring any further developments, while carmaker Volkswagen has rejected a report that suggested it had decided against doing business in Iran.