The South Korean government and the head of Hyundai have announced plans to step up sales and investment in the Islamic Republic during the Iranian weekend (Thur.-Fri.).
The first comment came via Hyundai Motor Company that has registered a steady growth of their share in the Iranian market.
South Korea’s top automakers Hyundai and Kia aim to export 60,000 cars to Iran in 2016, an executive from Hyundai Motor Company said on Friday.
‘‘The group has increased its sales target by 240% from 25,000 cars sold in Iran last year,” Hyundai CEO Jeong Jin-hang said.
Jeong made the sales projection in a meeting with the Minister of Trade, Industry and Energy Joo Hyeong-hwan on targeting the reopened Iranian market.
The company’s car exports officially came to a halt in 2012 after the international community imposed sanctions on the Middle East country due to its nuclear program, the Korea Herald writes. At present, the automotive group plans to increase its complete knocked down products that are assembled in the local markets.
To support South Korean firms in increasing outbound shipments to Iran, the ministry will help ease financial difficulties that companies may face in advancing into the new market.
“Iran’s exports are expected to grow 5.8% this year and 6.7% next year. The government will build a stable payment system and strengthen financial support,” said the trade minister.
Gholamreza Razzazi, CEO of Iran Khodro Diesel, a heavy-duty vehicle subsidiary of the national automaker, announced that his company is in discussions with Hyundai "to expand operations in the country".
Government Stance
In addition to the automaker's announcement, the South Korean government has promised to provide financial support to companies willing to invest in Iran.
The Korean trade minister said government-wide assistance will be offered so businesses can gain access to the resource-rich country.
Joo was speaking to a group of senior executives from Hyundai Motor, LG Electronics, Daelim Industrial Company and other South Korean companies planning to do business in Iran.
South Korea lifted sanctions against Iran last month after Tehran's landmark nuclear accord with world powers went into effect.
Joo said a high-ranking business delegation will travel to Tehran soon to explore opportunities for renewed cooperation.
“To promote trade and investment, Seoul is committed to maintaining the current Korean-won based settlement of accounts system while adding other forms of exchange using different foreign currencies,” he said.
“The euro and Japanese yen can be used in tandem with the won to settle accounts.”
Joo said South Korean companies would set up joint ventures with Iranian partners and reach technical transfer deals in such sectors as car manufacturing, petrochemicals and steel production.
“If headway is made, South Korean exports, including parts and components, will increase and benefit companies,” he said.
Up till recently, Kia and Hyundai have only considered shipping vehicles to the Iranian market, but since the rise of Chinese auto companies in the Iranian market, the South Korean companies have seen their market share eaten away by the cheaper Chinese alternatives.
So far this year, several Chinese car companies have invested heavily in joint ventures with Iranian companies to grow their market share. However, the South Korean auto duo retain a healthy advantage in customer perception for the quality of their vehicles.
