Azernews.Az

By Sara Rajabova

Iran’s automobile industry is expected to prosper following the removal of the international sanctions from the country under the recent nuclear deal between P5+1 and Iran.

The race has tightened for foreign automakers' access to Iran’s auto market. European manufacturers, which were forced to leave the Iranian market under international sanctions, are now in talks with the Islamic Republic to regain a share in Iran’s vast car market.

German company Mercedes-Benz plans to purchase a 30 percent stake in Iranian Diesel Engine Manufacturing Company in order to produce autos in the city of Tabriz.

Hashem Yekeh Zareh, the CEO of Iran Khodro Industrial Group has said Iran and Mercedes-Benz would sign a 10-year agreement to produce trucks and buses in Iran.

He also mentioned that a recent trip by a German delegation headed by Germany's Minister for Economic Affairs and Energy Sigmar Gabriel and separate trip by a French delegation headed by Foreign Minister Laurent Fabius to Tehran indicate the importance of Iran's auto market to foreign manufacturers.

Yekeh Zareh said that German Mercedes-Benz was a major partner for Iran before sanctions, and the company seeks to re-open its office in Tehran within next two to three months.

He also added that Mercedes-Benz wants to purchase 50 percent of Setar-Iran company (Iran Start) and sign a 5-year agreement to produce sedans.

The other leading German carmakers are also willing to return the Iranian market should the sanctions on Iran are lifted.

An Iranian official said Volkswagen could also become a reliable partner for Iran, in meantime adding that Iran Khodro may sign a deal with German Daimler AG to produce commercial vehicles and luxury cars as soon as three to four months from now.

Representatives from the French automobile industry were also striving to restore their previous share of the Iranian auto market.

French Peugeot wants to establish a 50-50 joint venture with Iran to produce car. Iranian officials said the French auto giant Peugeot is already in advanced stages of talks to provide parts to the leading Iranian carmaker Iran Khodro.

Yekeh Zareh said 30 percent of the cars produced would be exported, adding that French Peugeot and Renault as well as Japanese Suzuki have already agreed to return to Iran.

Iran, however, remains furious with the giant French carmaker Peugeot for withdrawing from the country in 2012 amid Western sanctions.

Yekeh Zareh said Iran will take its national interests into account and choose a partner that is strong and committed to its obligations.

The CEO of IKCO said that before sanctions Peugeot held 22 percent of Iran's car market, but withdrawal from Iran caused huge losses for the company.

The automobile industry accounts for nearly 10 percent of Iran’s gross domestic product. The latest data shows that Iran ranks 18th on the list of the world’s top auto manufacturers. However, the country’s automotive industry needs modernization after years of sanctions.

Sanctions on Iran hit the automotive industry hard, slicing production by 1 million units from its peak of 1.6 million in 2011 and leading to 100,000 job redundancies.

Iran is one of the biggest producers of cars in the region.

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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

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