Hyundai, Kia to Produce in Iran

Hyundai, Kia to Produce in IranHyundai, Kia to Produce in Iran

Hyundai Motor Group, which includes Kia Motors, is gearing up for the official reentry into the post-sanctions Iranian market by exporting semi-knocked down products as part of a joint venture with, as yet, an unnamed local partner.

The automotive group said on Tuesday its two auto manufacturing arms—Hyundai and Kia—will also supply complete knocked down products to Iranian automobile companies. This will give other foreign competitors a run for their money in Iran.

Market watchers forecast the automaker’s export resumption will begin in April for the second quarter, according to the Korean Herald.

Before sanctions, Hyundai Motor Group had sold around 20,000 units to Iran in 2011. The automaker stopped official exports of cars and auto parts in 2012 due to the sanctions on the Islamic Republic. However, in the intervening years, grey imports of their models have made their way into Iran from Azerbaijan, Kuwait, the UAE and Iraq.

Following the group’s expansion in the region, Kia’s all-new K7 sedan will hit markets in the Middle East, including Iran, in the first half of 2016 and Hyundai’s premium sedan Genesis G90 (also known as EQ900 in Korea) in the latter half.

Hyundai’s first dedicated hybrid car IONIQ and Kia’s Niro are also slated for debuts in the region later this year.

With the premium sedans, the G90 and K7, the Korean auto giants aim to grab the attention of middle- and upper-class consumers, while targeting consumers in Jordan, where demand for green cars is set to rise on the government’s support programs.

The company has not stated whether these vehicles will be produced in the Iranian market.

The nation’s second largest conglomerate resumed selling cars in Iran last year, albeit on a small scale. The company also stated earlier this year that it intended to sell over 200,000 vehicles in the Iranian market.

The Korean carmakers have been struggling in the region since last year, with their combined shipments falling 6% to 492,000 units in 2015 from 522,000 units in 2014, according to data compiled by the Middle East Automotive Council.

Hit by freefalling oil prices that have constrained the economy and consumer spending in the Middle East, Hyundai and Kia’s total January shipments plunged 37% to 25,900 units from 40,900 units in the same period of a year ago.