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Automakers Heading Back to Iran

February 01, 2016

Photo of Renault Sandero courtesy of Renault.
Photo of Renault Sandero courtesy of Renault.

Groupe Renault, PSA Peugeot Citroën, and Mitsubishi FUSO Truck and Bus Corporation (MFTBC) will increase production in Iran or return to the country following the lifting of economic sanctions on Jan. 16, the companies have announced.

For more than 10 years, Renault Pars has produced nearly 500,000 vehicles in the country under a joint venture with Iran's two main auto manufacturers, SAIPA (French Société Anonyme Iranienne de Production Automobile) and Iran Khodro.

In 2015, the venture manufactured the Logan pickup with Iran Khodro and the Sandero hatchback with SAIPA. Renault will considerably intensify operations in Iran and prepare future model releases in association with its two local partners as soon as smooth relations have resumed between French and Iranian banks, according to Renault.

In 2015, Renault Group sales increased 56.1% from 2014 to reach 51,500 vehicles and a 4.8% of market share.

During Iran President Hassan Rouhani’s recent state visit to Paris, PSA Peugeot Citroën, which has operated in Iran for more than 30 years, and Iran Khodro signed a joint venture agreement to produce latest-generation vehicles in Iran.

This 50-50 joint venture is expected to invest up to €400 million (US$435.8) over the next five years in manufacturing and R&D capacity. The investment will contribute to facilitate the development of a competitive manufacturing base for producing, launching and marketing Peugeot 208, 2008, and 301 models, fitted with latest-generation engines. The first vehicles will roll off the production line at the Tehran plant in the second half of 2017, according to the company.

Iran is a key component of  the PSA development strategy in the Middle East and Africa region, which is PSA Peugeot Citroën’s third-fastest growing international market. The group sold 180,200 vehicles in the region in 2015, up 6.4%, according to the company.

Following Daimler Trucks, which has announced its recommitment to the Iranian market, Mitsubishi FUSO Truck and Bus Corporation (MFTBC) has announced it will enter the Iranian market as part of Daimler Trucks’ sales strategy. FUSO has entered into a sales contract with Mayan, which will serve as FUSO’s distributor in Iran, according to the company. Mayan is part of the Dubai-based Mammut Group, a large truck bodybuilder and distributor in the Middle East. Sales of FUSO’s light-duty Canter cabover through Mayan’s dealer network will begin this year.

Daimler Trucks intends to open a regional representative office in Tehran carrying the Mercedes-Benz and FUSO brands in the first quarter that would contribute to economic growth and infrastructure improvements in Iran. Daimler trucks have been sold in the country since 1953.

China’s Chery Automobile Co., Ltd., recently inked a deal to expand the auto company’s production capabilities in Iran. Chery initiated cooperation with Iran’s Modiran Vehicle Manufacturing Company (MVM) in early 2004 to export CKD kits for vehicle assembly. In 2009, Chery acquired MVM as the largest shareholder. Chery has built a plant with an output of 60,000 units per year, and successively established over 150 sales and service network in Teheran, Mashhad, Isfahan, and Tabriz. Chery’s after-sales service and vehicle quality have been ranked top in Iran, according to an analysis report released by ISQI.

Chery’s joint venture has become Iran’s third-largest automaker behind Iran’s two state-owned enterprises, IKCO and SAIPA. Chery topped the list of foreign brands in Iran with sales of nearly 40,000 units in 2014 and 2015 consecutively. By late 2015, Chery’s market share in Iran had reached 180,000 units, accounting for over 50% of China’s total passenger vehicle exports to Iran, according to Chery.

Since its entry into Iran, Chery has launched models such as Tiggo 5, Tiggo 3, E5, Fulwin 2, and new QQ minicar based on local market demands. Chery is planning a future launch of up to three new models a year to meet local demand.

Chery has also worked out a plan for expanding Iran Industry Park. Chery will build a new auto industry park with an added output of 100,000 units per year that adds to the current 60,000-unit production level. Chery hopes to sell 100,000 units annually in the next three years.

France’s DS Automobiles has also opened its first dealership in Iran and announced the local launch of two models, the DS 5 and DS 6. The launch of the brand in Iran follows the October announcement of a deal between DS and ARIAN Group to operate and oversee the automotive brand’s first venture into the Middle East. The range will be expanded this year with the arrival of DS 5LS sedan and other models.

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