Automotive Industry in Iran - Foreign Direct Investment and Imports

Foreign Direct Investment and Imports

There are over 25 automakers in Iran, actively producing both light and heavy vehicles. These automakers are in joint venture with several popular international automakers such as Peugeot, Citroen (France), Volkswagen (Germany), Nissan (Japan), Toyota (Japan), Kia Motors (South Korea), Proton (Malaysia), Chery (China) and many other established producers of light and heavy vehicles such as Renault (France), BMW, Mercedes Benz (Germany), Daewoo and Hyundai (South Korea) have emerged since 1991. Italian carmaker Fiat has also announced of plans to begin production of its Siena sedan in Iran in 2008.

Chery Automobile (China) in August 2007 entered into a US$370m joint venture with Iran Khodro, Iran to produce cars for West and South Asian markets. Chery Automobile is to hold 30% of the venture, and Khodro will hold 49%. Solitac, a Canadian front company, is to hold the remaining 21% of the venture. The factory will be in the Iranian city of Babol. Anhui Ankai Automobile (also of China) signed a deal in January 2008 with ARG-Diesel Iran to supply it with 600 buses, valued at €51.35m. The deal is to be complete by October 2008.

Iran annually needs some 4,000 buses for its domestic transportation. Since the 1970s, Iran has been producing a number of different buses, such as German Mercedes and MAN as well as Swedish Scania and Volvo that it has exported throughout Asia. Daewoo Bus Corp. and an Iranian automaker Ardebil Sabalan Khodrow-Maywan have teamed up to build buses in Iran. The plant, which is slated to be completed by March 2010, would have a production capacity of 2,000 buses per year and would produce some 800 city and intercity buses in the 18 months after its inauguration. Based on the agreement, the engines and gearboxes would be manufactured in South Korea. But production would increasingly shift to Iran, where about 60 percent of the parts would be made.