Volkswagen also considers returning to Iran

Volkswagen has joined Daimler, PSA Peugeot Citroën and Renault on the list of European car companies that are weighing a possible return to Iran. According to the German brand, speaking to Bloomberg, it has already begun political negotiations to that end and is closely monitoring the development of the agreement between the Middle Eastern country and the 5+1 powers: Germany, China, the United States, France, the United Kingdom and Russia.

Volkswagen clarifies that it has not yet made any final decision and that any steps it takes will be subject to how the agreement develops. Two weeks ago, its compatriot Daimler conveyed the same message to the Reuters news agency. Both are paying close attention to the position of the United States, since many of their customers and investors come from there, and the most recent news seems to encourage them to press ahead with their plans.

Volkswagen entered the Iranian market in 2005, when its partner BAMCO began manufacturing the Gol exported from Brazil.

Volkswagen has been present in the Iranian market for ten years. In 2005, its local partner BAMCO, a subsidiary of the Iranian group Kerman Motor Corp., began producing the compact Gol, which was exported from Brazil and completed at the plant on the outskirts of Bam. Annual output stayed well below the 20,000 units that Volkswagen had targeted, barely reaching 5,000 during the first two years, and it kept falling as pressure from the United States and the West on the Tehran government increased.

For the German company, returning to Iran is seen as a way to expand beyond the European and North American markets, which, the latter in particular, no longer deliver the strong results they once did. Volkswagen is only one of many German companies eager to recover business transactions in that nation, with which Germany has maintained this kind of link since the 19th century.

Car industry analysts such as IHS Automotive, however, predict that in this sector they will be overtaken by Chinese brands, whose network of importers in Iran is larger, and by Japanese ones, which dominate much of the markets around the Persian Gulf. It will be a race to reposition and to profit from the renewal of Iran’s aging car fleet.

Source | Bloomberg