Why Iran’s auto ambitions will benefit economy, not consumers

Al Monitor| Alireza Ramezani: In February, Iran hosted an international auto show for the first time in 11 years. Some two dozen European, Asian and Iranian brands, including Iran’s longtime French partners Renault and Peugeot, took part in the Feb. 14-18 event. Many experts saw the exhibition, which was organized by Iranian and Chinese companies, as an invitation to both global carmakers looking for new markets and Iranian consumers looking for new global brands.

The Tehran Auto Show took place immediately after a two-day automotive conference at Tehran’s Milad Tower, where 400 global manufacturers of cars and car parts gathered to discuss new ways of cooperation. Iranian companies and foreign firms made at least six agreements on the sidelines of the conference, Aftab News reported.

Tehran Auto Show participants included BMW, Scania, KIA, Hyundai, Brilliance and even a Russian brand — UAZ. The latter displayed three models of vehicles and had obviously redesigned its vehicles for Iranian roads and weather conditions. This is the first time in more than a decade, after the Russian GAZelle van, that Russian vehicles are entering the Iranian market.

Saeid Zarepour, CEO of Tavan Khodro Group, which has entered into a joint venture with UAZ, expressed confidence that the UAZ models will find their place among Iranian consumers when the vehicles arrive in the country in April. He told Al-Monitor that Iranian firms supply 40% of the parts used in the vehicles. He said that providing extensive after-sales service will be a priority for the Russian brand, which he believes is a staunch competitor to Chinese carmakers.

London Taxi, the producer of the most expensive professional taxi cabs in the world, also participated in the Tehran Auto Show, as its managers seek a way into the “booming” Iranian market. The British company partnered with Chinese Brilliance, which is already registered in the northwestern Aras Free Trade Zone. Alex Luo, a manager at London Taxi, told Al-Monitor that the company is negotiating with Iranian officials to enter mainland Iran. He hopes the black cabs will be welcomed in well-off areas in major Iranian cities.

Many other brands are preparing to grab a share of Iran’s 80-million-strong consumer market. However, the government is enforcing the condition that no intermediary company can be involved in joint ventures and that the manufacturer must prioritize providing proper after-sales service.

 

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