Economy, Auto

Fourth Auto Deal

Fourth  Auto DealFourth  Auto Deal

A senior official of the Iran-Italy Chamber of Commerce has announced Iran striking a fourth auto deal before either company made an official announcement.

Iran Khodro and Italian-American automaker Fiat Chrysler, otherwise known as FCA, have apparently reached a preliminary agreement to produce a new range of vehicles of European origin in Iran.

News of the joint venture follows on the heels of Iran Khodro, the country’s largest state-affiliated car producer, having announced deals with Renault, PSA Peugeot Citroen and Suzuki.

But the Italian deal has been the best kept secret of the group so far, with even Iran’s President Hassan Rouhani not mentioning any talks of an auto deal during his visit to Italy in recent weeks.

 From the Horse’s Mouth

On Sunday, the Iranian co-chair of the joint chamber of commerce announced that the Italian-American automaker can rival both Volkswagen and Peugeot in the Iranian market, according to Mehr News Agency.

Ahmad Pourfallah added that the two companies have not yet signed a deal, though “we hope an agreement will be finalized in the near future”.

“On the basis of negotiations, it has been stipulated that Fiat’s new cars will be produced in Iran and exported to the regional countries. Accordingly, a joint production plan rather than direct import has been put on the agenda,” he said.

The official further elaborated on the details of the up-till-now unknown auto partnership by saying that “new Fiat models will be jointly produced in Iran and that a new firm will be established between the two”.

Fiat will be in charge of supplying all auto parts to Iran, until local partners start producing them.

“The amount of investment is still under negotiation by the two sides,” he added

Pourfallah added that Fiat has achieved major advancements in the realm of automotive manufacturing and now offers a range of cars that are more affordable and energy efficient.

Financial Tribune reached out to Fiat for confirmation with Corporate Communications Manager Claudio D’Amico who responded by saying: “FCA declines to comment on rumors from Iran.”

Fiat’s response confirms that the rabbit has been let out of the hat too early for the Italian company’s liking.

 The American Connection

To add credence to Pourfallah’s statement, IKCO’s CEO Hashem Yekezare said American auto technology will be “indirectly imported to Iran” through cooperation and partnership with an Italian company, thus confirming the deal.

The auto-making chief said Fiat has a strong auto manufacturing complex, intimating IKCO’s predilection for partnering with the company.

Fiat is not unheard of in the Iranian market, with some of their brands plying the Iranian roads since past several years. In more recent times, the Italian automaker has quietly allowed test sales of popular Fiat models.

In 2009, Fiat’s Turkish base produced a small run of Seina to enter Iran in limited numbers; these remain popular but rare secondhand vehicles in the local market.

Back in August 2015, an Iranian company named Lotus International Development announced on their website that Fiat 500, Fiat 500 L, Doblo and Fiorino are available in their showrooms in Tehran, local automotive website Carnet wrote at the time.

The 500 model is priced at 847 million rials ($26,000 at market exchange rate). By February 2016, only secondhand 500’s are available in the open market.  

The Alfa Romeo models for sale in the Iranian market are limited to three models currently, with Giulietta selling for 1.6 billion rials, Alfa 4C selling for 7 billion rials and Mito coming in at 1.37 billion rials respectively.

Maserati too has three vehicles for sale in the local market. These are the Ghibli selling at 17.5 billion rials, Quattroporte at 9.8 billion rials and the Granturismo selling at 19 billion.