Motor Vehicle Industry

New options have actually emerged for foreign investors, following the lifting of sanctions against Iran during the early 2016. Motor vehicles, the largest production industry in Iran, is especially tempting for foreign businesses. Even as we predicted, French vehicle companies are paving the way in which in Iran, but even more opportunities are anticipated to arise as Iran is designed to privatise and liberalise its automotive business.

New possibilities for automobile manufacturers in Iran

After Iran’s pledge to move backs the range of its atomic tasks, financial sanctions were raised in 2016, providing brand new options inside untapped market. Iran’s attractiveness for international people was more boosted by President Rohani’s (a dynamic economic reformer) supporters’ victory in elections.

Automobiles, with production worth at US$23.7 billion in 2014, is the biggest production business in Iran and is particularly attractive for international companies. Vehicle production in Iran peaked at 1.6 million cars in 2011, decreasing to around 980, 000 products in 2015 because financial sanctions becoming enforced.

Yet Iran continues to be the biggest vehicle producer by amount in the centre East and Africa and it is expected to offer future gains for automobile manufacturers. Automobile manufacturing in Iran is forecast to attain 1.6 million products by 2018 and 2.0 million by 2022. A big share of this production is expected to-be exported into powerful center East marketplace.

French vehicle manufacturers pave how for opportunities in Iran

As we predicted, French car manufacturers had been the first to re-enter Iran. In January 2016 PSA Peugeot Citroën (PSA) launched a joint venture with Iran Khodro. PSA will invest €400 million in production facilities and analysis and development on the next 5 years. PSA plans to produce Peugeot 208, 2008 and 301 designs in Iran and switch the country into a regional export hub.

Another French vehicle producer, Renault, also has a jv in Iran, with Industrial Development and Renovation business of Iran. The partnership has the capacity to create 10, 000 Renault Sandero vehicles annually. In 2016, after the removal of sanctions, Renault intends to additional increase creation of Logan and Sandero models, also introduce two new Renault models in Iran.

Other car producers are expected to follow French organizations after the governmental scenario in Iran settles. Including, Fiat Chrysler Automobiles (FCA) has expressed curiosity about making commercial vehicles and buses in Iran. US car producers may likely to follow, tempted by Iranian customers’ choice towards American services and products, with US-built vehicles currently making a comeback when you look at the Iranian brand-new automobile market.

Iranian authorities try to privatise vehicle business, but a number of roadblocks continue to be

And even though Iran provides enormous options, the Iranian car industry is characterised by obsolete technology and production techniques. Considering that the imposition of sanctions last year, the Iranian automobile business has suffered from a chronic insufficient investment. In addition, the Iranian automobile industry stays mainly state-owned, which can be blocking the industry’s modernisation and growth.

Yet Iran is determined to restart its car industry. In March 2016, President Rouhani expressed plans to privatise a and motivate shared endeavors so as to make the Iranian automotive business more technologically-advanced and efficient. More importantly, Iran is designed to pull federal government defense on domestically-made cars, although this goal could be more difficult to achieve considering resistance from governmental opponents.