Skoda Denies Iran Market Entry

Skoda Denies Iran Market EntrySkoda Denies Iran Market Entry

Volkswagen's low-cost subsidiary Skoda AG has not teamed up with a local company to sell vehicles in Iran, according to Iran's Ministry of Industries, Mining and Trade.

The new report, published by the Persian website Asre Khodro, says a spokesman of the ministry has denied that the Czech company signed a contract with a local dealer.

The statement by the ministry specifically says Skoda AG "has not made any representation with the local authorities".

The denial follows recent reports that a local company had teamed up with the Wolfsburg-owned company to sell their small vehicles in the local market.

Financial Tribune contacted Skoda, but they did not respond at the time of going to print.

Earlier in September, reports circulated in the local media that Volkswagen and Skoda AG had begun to look at the local market.

At the time, Skoda was said to be looking at the prospects of entering Iran, but had not taken a decision, its R&D chief Frank Welsch said in an interview.

“If the conditions develop right, this will be a market where we can fit in quite well with our offerings,” Welsch said.

In August, a report by Financial Tribune quoted an executive at the company, Thomas Kubik, as saying, "We at Skoda Auto are excited about the news of the P5+1 agreement between Iran and the international players. Iran is an attractive market."

At the time, Kubik stressed that Skoda has researched the Iranian market and believes that its vehicles will suit the budgetary constraints of Iran's middle-class consumers.

VW and Skoda may face stiff competition from past market leader PSA Peugeot Citroen and French rival Renault , which are also positioning themselves in the race to capture market share in Iran.

The company's vehicles could easily carve a niche in the domestic market, although competition is heating up.  

Vehicles produced by the Prague-based company include Skoda Citigo, a small hatchback suitable for urban roads.

Citigo retails in Europe for around $9,500 (320 million rials).

Another suitable candidate would be the medium-sized Fabia hatchback that is priced around $15,000 (500 million rials).

Other cars, which could also make it to Iranian forecourts, are Skoda's range of large sedans. In Europe, Skoda's Octavia is seen as a good company car as well as taxi vehicle.

In the United Kingdom, due to its long wheel base and VW engine, Octavia is favored by taxi companies.

Audi, Skoda's upmarket sibling, was also rumored to be in talks with domestic automakers.

Audi responded to a Tribune request about their market maneuvers by saying, "We hereby would like to inform you that an entry into the market of Iran is not executable for AUDI AG. Therefore, we have no official dealership or other kind of representation in this area."