Economy, Auto

Volkswagen Returning to Iran

Volkswagen Returning to Iran
Volkswagen Returning to Iran

The German automaker Volkswagen, the largest in Europe and the second biggest in the world, announced it was taking its first steps toward entering the Iranian market following the Islamic Republic’s nuclear accord with the western powers.

According to AutoNews, the VW Group pointed to the decision of having more lax economic sanctions to the country, which during the past four years blocked attempts by automakers to conduct any business in Iran.

“We’re monitoring the current development and are leading first talks on a political level,” the company commented. “There are no decisions or resolutions yet though. Possible further steps will be determined by future developments.”

Volkswagen would join French rivals PSA Peugeot Citroen–the former leaders of the Iranian auto market–as well as Renault in heading back to car selling in the country.

PSA announced this week it was conducting advanced negotiations to establish a local joint venture for domestic production with a local peer, Iran Khodro. The JV would then produce vehicles from zero based on the company’s newest vehicle architectures and engines.

Volkswagen would need an automotive bridge into Iran, in a bid to lift deliveries outside more mature markets such as Europe and North America and make up for the losses from the Chinese cool down and the collapse of Russian and Brazilian markets.

The company did not state which of its brands would enter the Iranian market, but in November last year VW's Skoda Automotiv AG said it was in discussions with local car producers.

Last week, Financial Tribune was contacted by Audi, another subsidiary brand of VW, stating contrary to what some local dealers have said, they were not moving into the market.

The company has recently pushed into Africa by reintroducing small-scale assembly of cars in Nigeria earlier this month and is also mulling new manufacturing locations throughout Southeast Asia.