The market for Iran-produced cars is changing rapidly in its northern Caspian Sea neighbor, Azerbaijan.
In a report published in Baku's Trend News Agency this week, auto experts from the former Soviet state highlighted Iran's trouble in attracting business from their northern neighbor.
Citing the plethora of Iran's new automotive deals, including with Daimler's Mercedes-Benz, Volkswagen and Peugeot, the report claims Iranian cars, "even those made in partnership with European luxury car companies are not popular".
This is while no deal has been officially announced yet and no practical measures have been taken so far. Obviously, the Azerbaijan media claim that these "nonexistent" cars are "not popular" is absurd to say the least.
The report says Azerbaijan has a population of 9.6 million people and is saturated with over 1.2 million cars, which are expected to reach 3 million in the next 10 years.
Baku-based economist, Oktay Hagverdiyev told AzerNews that the situation could affect Azerbaijan, but only slightly, as cooperation with Iran is mainly focused on energy.
“Azerbaijan did not buy cars from Iran. Even if Mercedes-Benz and Volkswagen start manufacturing in Iran, Azerbaijanis will prefer cars produced in Russia, for instance,” he claims.
Hagverdiyev believes foreign companies are "thinking before returning to the Iranian market", which can be filled in a year or two, and then the production will fall sharply and result in a loss of investment.
Azerbaijan mainly imports its cars from Georgia, which declined after the transition to Euro 4. Some 2,207 cars worth $41.4 million were exported from Georgia to Azerbaijan in January-June 2015. This is 5.4 times less than in the same period of 2014, the Georgian National Statistics Service said.
Another situation is also emerging. Iran plans to produce cars in Azerbaijan, with Iran Khodro negotiating to set up a car assembly plant, IKCO Managing Director Hashem Yekezare told Trend. The plant will be built using Azerbaijani investments and the production will start roughly two years after obtaining the license. Today, Iran Khodro exports cars to Azerbaijan and Yekehzare claims Iran plans to export 2,000 cars to Azerbaijan in the current year.
The company also plans to manufacture 10,000 cars annually in Azerbaijan, which will be exported.
Currently, two auto manufacturing plants–Nakhchivan and Ganja automobile plants–are operating in Azerbaijan.
