Russia's automotive sector is likely to be one of the main beneficiaries of the nuclear deal reached by Iran and the West come January, as it has initiated moves to develop a market for its products in Iran.
On the sidelines of the First Russia-Iran Trade and Industrial Expo, Financial Tribune spoke with Andrey Dorofeev, overseas sales executive of GAZ Group, maker of light-, medium- and heavy-duty vehicles, to discuss his company's plans to reenter the Iranian market.
Asked how GAZ plans to enter the Iranian market, the representative said, "The Iranian market has a very profound experience in automotive production with many parts makers, so shipping completely built-up vehicles to Iran may not be in our best interests."
Dorofeev noted that to avoid import taxes, GAZ is considering building locally since it is more appealing to customers pricewise.
He added that the company is in discussions with local partners to begin production, but did not go into details.
The representative did add, "Companies have come and are still coming to discuss contracts. We would disclose those details, once the negotiations are complete."
GAZ is no stranger to Iran and about 10 years ago, the company did start shipping the Ford Transit-derived GAZelle minivan–a few remain today on the roads.
Dorofeev said "that was our company's first phase [in the Iranian market]", adding that since then, his company has invested heavily on a range of new commercial vehicles, some of which were on display at the expo.
He noted that many of the Iranian car production lines are "fairly old and need to renew their technologies and products".
The GAZ representative further said it would be better, whoever their future partner turns out to be "to have a national distributor network". He stressed that his company does not want to deal with third-party dealers.
"In terms of medium-duty vehicles, municipalities could be their biggest buyer as this remains a niche sector with limited competition," he said.
Dorofeev noted that "cooperation with Iranian companies can be extensive" [over the long term] due to the Russian companies' range of heavy-duty vehicles, which were not presented at the event.
The GAZ group is well aware of the increasing competition and hopes to gain a market share, despite the presence of Japanese, South Korean and European rivals.
Whether or not Iranian buyers warm up to the Russian company remains to be seen over the next few months.
Russian companies have struggled to gain a market share here in the past few years and their representation up until this point remains minimal.
