Toyota has suspended car exports to Iran in a move expected to affect traders in the UAE who ship the Japanese vehicles to the Islamic republic. The car maker said it had stopped the exports in June in response to increasing US-led scrutiny of international companies doing business with Iran.
"We made the decision after taking into account the international situation including sanctions by the US and the UN on Iran," said a Toyota spokeswoman. The US is the biggest market for Toyota. Toyota exported about 4,000 cars to Iran in 2008 but the number dropped to 246 last year as the global financial crisis sapped demand in Iran. Toyota exports to Iran reached 222 by the end of May this year.
Some of the Iran-bound cars were shipped through the UAE, with transit points such as Dubai re-exporting vehicles to the country, according to officials. The UAE, along with Egypt, is among the biggest markets for Japanese vehicles in the Middle East, said Hiroki Matsumoto, the managing director of the Japan External Trade Organisation for Dubai and the MENA region. "A major part of total exports to the UAE will be re-exported to Iran," he said. "It's difficult to find out the figure for Japanese products exported [to Iran]."
Al-Futtaim Motors is the official distributor of Toyota within the UAE, with the Land Cruiser four-wheel-drive one of its most popular models. "The UAE is our only market and Iran is not somewhere we export to," a spokeswoman for Al-Futaim said. Nonetheless, some Toyota cars sold by the manufacturer in Japan were shipped to free zones in the UAE before being re-exported to Iran with the car maker's permission, said Morteza Masoumzadeh, the head of the Iranian Business Council in Dubai.
"This can no longer happen and these cars can longer be shipped to Iran as the manufacturer has put a ban on exports to Iran," he said. Iran was the UAE's fourth-biggest trading partner in the first quarter of the year, with re-exported goods accounting for much of that, figures from the Ministry of Foreign Trade show. Nevertheless, Iran's economic isolation has intensified in recent months, with EU sanctions coming into force last week including a restriction on the supply, sale or transfer of equipment or goods that could be used in developing Iran's alleged nuclear weapons programme. Japan last week approved new sanctions against Iran in line with a UN Security Council resolution in June, including measures on financing and military goods, limiting letters of credit for shipments to Iran.
US sanctions penalise foreign companies exporting banned materials and technologies to Iran by limiting their financial transactions and business activities in the US. Japanese companies have been facing increasing pressure from the US to scale back their business transactions with Iran. US researchers have accused the oil-and-gas producer Inpex and units of Japan's three largest banks, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group, of engaging in business that could fail to comply with US sanctions.
tarnold@thenational.ae