Swedish truckmaker AB Volvo has stopped assembling trucks in Iran because U.S. sanctions are preventing it from being paid, a spokesman for the company said yesterday.

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. 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.