TEHRAN - Iran said Tuesday it has decided to block planned car imports by French car giant Renault, presenting fresh difficulties in the company's dealings with the Islamic republic.
Renault had reportedly planned to import several thousand Megane saloon cars to supplement its local production of the lower-budget L-90, or Logan, model.
But Iran's industry ministry said in a statement that "because of some ambiguities regarding after-sales service, imports of this car are halted as long as the problems are not resolved".
The cars have been already been advertised in the national press and sources close to the company said a few hundred Megane cars have already been pre-sold.
It is not the first time that Renault has hit difficulties in Iran since it signed a deal in 2004 to manufacture the Logan.
In April, the industry ministry suspended that deal, amid demands that it be given a share of Renault's foreign markets. Renault eventually ceded to Iran's demands by pledging to export some 20 percent of the cars its plans to make in the Islamic republic.
The joint venture to make the Logan, potentially worth hundreds of millions of dollars, is the largest direct and long-term investment in Iran by a French firm since the 1979 Islamic revolution.
The production of the Logan is scheduled to start later this year, with a target production of 300,000 vehicles in 2009.
The progress of the deal, as well as Renault's wider relations with Iran's authorities, is being closely watched by other firms in Europe as a gauge of whether such investments in Iran are worthwhile.
The country has a closely protected market and remains wary of foreign investors. Contracts are also subject to intense scrutiny, even after they have been signed.
Blair blasts Britons over Iraq war