Skoda Considers Iranian Market Attractive

Skoda Considers Iranian Market AttractiveSkoda Considers Iranian Market Attractive

Czech car producer Skoda Auto's communications chief, Tomas Kubik, said Iran is a very attractive market, however, no decision has been taken so far for doing business in Iran.

Kubic was responding to Financial Tribune's inquiry this week on the Volkswagen-owned subsidiary's entry in the Iranian market.

The Skoda official confirmed reports by the Ministry of Industries, Mining and Trade that they have so far not applied for creating a local subsidiary.

"Therefore, we observe the current development[s] closely," he said.

Kubic noted that the company welcomes the agreement leading to the cancellation of economic sanctions against Iran.

Asked about their long-term plans and how the Iranian market is viewed by Skoda, Kubik said, "Since no decision has been made yet, we cannot provide any more information. In case there is anything new regarding this topic, we will be happy to inform."

The outright reversal of position from the German company shows that even if they are in talks with local car manufacturing, as was previously reported, they are unwilling to make public their plans, due to US-led sanctions prevailing against Iran.

  Previous Rumors

A previous report, which rejected the news that Skoda is entering the market, was published by the Persian website Asre Khodro. In that statement, a spokesman of the ministry denied that the Czech company signed a contract with a local dealer.

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

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

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

At the time, Skoda was said to be looking at the prospects of entering Iran (like many other European carmakers), 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 Kubik as saying that Skoda has researched the Iranian market and believes that its vehicles will suit the budget of Iran's middle-class consumers.

VW may face stiff competition from past market leader PSA Peugeot Citroen and rival Renault, which are also positioning themselves in the race to recapture market share in Iran. It is also facing growing competition from Chinese manufacturers who do not wish to be pushed out by European brands and are aiming their vehicles at the lower end of the market.

However, Skoda has a long history in Iran, with their original showroom on Taleqani Street continuing to continuing to hold the company's logo the company's logo on a rotating signboard. The garage is currently a showroom of antique cars.

The company could achieve some success with their cars in the local market if they return. Some of their lower-end vehicles, which have been a hit in Europe, could do likewise here if they can produce in the country to avoid import tariffs.

Possible vehicles 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). This has won successive awards for its build and reliability from Britain's What Car magazine.