"We discussed moving towards reducing economic ties with France especially in the auto industry," the head of the national security and foreign affairs committee, Alaeddin Borujerdi, said.

Borujerdi made the comments after a joint meeting of his committee and the industry committee.

"There is no reason to continue the current trend, considering France's irrational hard line and the Sarkozy government's unfriendly policies especially on the nuclear issue and at the (UN) Security Council," he said.

"It was decided that the necessary studies be done and that we hold the next session with high executive officials," he added.

Since Sarkozy's election, France has considerably toughened its position towards Iran and has called for the Security Council to impose a third set of sanctions to punish Iran for its failure to heed ultimatums to suspend uranium enrichment.

In September, Iranian President Mahmoud Ahmadinejad warned that France's new tougher position could hit economic relations.

French cars have a prominent presence in Iran's closely protected auto market, and models such as the Peugeot 405 and 206 have been manufactured under licence by Iran Khodro, Iran's largest car manufacturer.

Iran also produces the Logan, known locally as "Tondar", in a joint venture worth hundreds of millions of dollars with Renault.

In March 2007, about 85,000 Iranians placed an order for Tondar, paying the equivalent of 5,400 dollars in advance but only 10,000 cars were delivered in 2007.