Swedish mechanical components and sub-systems manufacturer, Leax Group, is eying Iran for potential new business following its recent visit to the country organized by Scandinavian automotive supplier association, FKG.
The Swedes are following hot on the heels of French supplier body, FIEV, which has been beating a path to Tehran's door for some time, but the possible and imminent lifting of sanctions against Iran appears to be concentrating business minds, Just Auto wrote.
"Iran used to be a very good market for Volvo and Scania, and we are a major supplier to the truck industry," Leax Group president and CEO, Roger Berggren, said on the sidelines of this year's FKG Suppliers Forum in Gothenburg.
"We know the investment level has been very low due to sanctions and there may be a replacement need in the market. With that as a base—and Iran is a big country of 80 million people—that was the starting point.
"It [trip] was partly subsidized and sanctioned by the Swedish government. The picture of Iran is making people a bit reluctant to go on such a journey [and] it is not the easiest market to work on. The nuclear agreement is still not signed, but we know doing business will take time."
However, a significant young and educated population is yearning to purchase high quality products, with the current car and commercial parks consisting of aging models in urgent need of upgrade.
Obviously what has happened is that with the sanctions from Europe and the US, they have gone for Chinese alternatives and want to get back to the European supplier base. It is a tough environment for trucks and roads need improving.
"People were very pleased to see us. We met several companies, IKCO, SAIPA and some suppliers. We [also] met some tractor manufacturers and … they want new technology," Berggren said.
"They wanted joint venture cooperation and were very open, both in Tehran and Tabriz."
The FKG group—part of the component body's 'Go Global' initiative for Scandinavian members to expand outside traditional markets—also met the Iranian supplier association, but Berggren is realistic enough to know any translation from initial visits to concrete deals will take a significant amount of time.
"I think it will take several years. The financial system is not yet fully in place; it is important to get paid so they have to put this financial system back. We need to find partners locally we can cooperate with," said the Leax chief.
"We need to think from our side on powertrain components, gearboxes and propeller shafts. I think engines and gearboxes for some time will come from the OEMs in Europe, but of course this [is] good for us.
"I have been in this business for more than 25 years; I tend to want to go home and double check the numbers."
Last month, the 1,200 employee-strong Leax Group secured its largest ever contract, with a deal to manufacture all gears and shafts for an unnamed European truck manufacturer in South America. Production will take place at Leax's site in Curitiba, Brazil.
