Challenges Await Chinese in Iran Auto Market

Challenges Await Chinese in Iran Auto Market
Challenges Await Chinese in Iran Auto Market

Chinese auto manufacturers will need to reduce prices by 20 percent if they plan to continue selling in Iran, said secretary-general of Iranian Auto Parts Manufacturers Association, Sassan Ghorbani on Friday.

If western sanctions against Iran are lifted, global auto manufacturers may enter the Iranian market to invest. "Accordingly, different models will be available for reasonable prices," ISNA quoted the official as saying.

Chinese cars are normally copies of Korean, Japanese, European and American brands, as "the Chinese do not possess the technology for designing and producing from scratch," he elaborated.

Some Chinese models look more attractive than domestically produced cars; he said explaining that "this is the main reason why Chinese vehicles have become popular with Iranians."

"Once the market can offer different international brands, the Chinese cars will lose the only competitive edge they now have. They would, therefore, have to reduce prices by 20 percent to make up for the loss," he argued.

He further noted Iranian companies that assemble Chinese cars have the option to improve quality and reduce prices by 10 percent to survive in the market. If they fail to do so, they will have no option but to leave, he stressed.

Chinese cars have become increasingly common in Iran in recent years with some East Asian automakers collaborating with Iranian producers like Saipa.

Due to the general lack of options and investment in the local industry, Chinese manufacturers have gained a foothold in the market.  The number of Chinese models available in the market currently stands at around 20, with the number expected to double by the end of the current Iranian year (ending March 2016).