Economy, Auto

Volkswagen, Skoda Tapping Iran Market

Volkswagen, Skoda Tapping Iran MarketVolkswagen, Skoda Tapping Iran Market

Volkswagen and its Skoda brand is exploring the Iranian market, following the country’s deal with the West to end sanctions, which could cut their dependence on volatile Chinese and Brazilian markets and challenge French rivals.

Iran is already the Middle East’s largest car market and analysts believe it could grow rapidly, with a population of almost 80 million and 1.1 million cars sold last year, Reuters wrote. Investment from Europe and elsewhere could start pouring into the country as soon as next spring, after July’s international deal to lift sanctions in exchange for curbs on Tehran’s nuclear ambitions.

Germany’s Volkswagen, hit by a drop in demand in China and Brazil which together account for almost 40% of its global sales, is keen to tap new markets.

“It is still too early to say which product we could use to go in with, but of course we see the potential,” VW brand R&D chief, Heinz-Jakob Neusser, said on Wednesday at the Frankfurt auto show.

“Iran is a very interesting market with great opportunities,” Neusser said, adding that VW would conclude an assessment of the country’s auto market by the yearend.

Czech division Skoda is similarly looking at the prospects of entering Iran, but has not taken a decision, its R&D chief Frank Welsch said in an interview.

“If the conditions develop right, this will be a market where we can fit in quite well with our offerings,” Welsch said.

VW and Skoda may face stiff competition from past market leader PSA Peugeot Citroen and French rival Renault , which are also positioning themselves in the race to capture market share in Iran.

A company source said in July that VW was considering a move into Iran with the mass-market Skoda and Seat brands.