Auto Preferences to Shift

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The preferences of Iranians are likely to change in the post-sanctions era regarding their choice of cars, said an automotive expert this week.

According to Farbod Zaveh, South Korean carmakers are likely to continue operating strongly in Iran, though the same cannot be said of Chinese brands, Eghtesad News reported.   

"Chinese auto companies have been selling their cars at prices higher than their worth and in large numbers. However, Iranian customers are no longer interested in that range of products," he said.

"At best, the Chinese carmakers might be able to sell in Iran for another year. In order to sustain their presence further,r they will need to reduce prices. "

Zaveh noted that the same will not apply to South Korean cars, mainly because the quality of their cars is much higher.

"Even if more Japanese and European carmakers enter Iran's car market, the Koreans will not be pushed out because it has been globally proven that the quality of Korean cars are at times even higher than that of European brands," he said.

The expert said the economic situation will change for the better in Iran after the western-imposed sanctions on Iran over its nuclear energy program are eased. In that situation, several foreign brands are bound to vie for a share of Iran's automotive market.

"Of the brands that are already present, Hyundai, Kia and Toyota are sure to expand their businesses in Iran and some may even set up production lines in Iran so that they can sell vehicles at more competitive prices.    

Iran and six world powers (the five permanent members of the United Nations Security Council plus Germany) reached a landmark agreement in July that limits Tehran's nuclear program in exchange for an end to decades-old trade and financial restrictions that hampered the country's economy. The deal, officially known as the Joint Comprehensive Plan of Action, is expected to take effect later this month.

While noting that European carmakers will not be the leading foreign auto companies in Iran, Zaveh said the Japanese are very conservative and it is not very likely of them to set up production lines and enter Iran's market with direct investment.

"However, there is a possibility of Nissan manufacturing Datsun in large numbers here in Iran and establish an export hub for the region," he said.

The automotive expert further said it will be more difficult for countries that have close business ties with the United States to operate in Iran.

"Due to the time needed for completing bureaucratic procedures, no major changes are expected to take place in Iran for at least another nine months," he said.

That being said, Zaveh does not mention the multilateral talks held recently by foreign automakers for signing contracts with Iranian car manufacturers such as Iran Khodro, SAIPA and Pars Khodro.

However, recent trends show that Iranians prefer any car that is not produced by the three main producers due to their perceived low quality and high price.