Economy, Auto

VW on Cusp of Signing Deal

VW on Cusp of Signing Deal
VW on Cusp of Signing Deal

An Iranian official said on Sunday German automaker Volkswagen was expected to sign a deal with an Iranian partner in the coming weeks to produce vehicles in the country.

Tehran’s Ambassador in Berlin Ali Majedi said VW has been looking into the Iranian car industry for "some time" and is closer than ever to a final investment decision.

Majedi announced that the company’s management has been specifically studying the capabilities of local carmakers and has whittled the list down to two companies.

He did not name the companies, though Press TV reports it could be Kerman Motor, current producer of Mazda, or the refrigerated truck group, Mammut Company.

Volkswagen announced last September that it is preparing its Skoda brand for the Iranian market, according to the report.

"Iran is a very interesting market with great opportunities," VW R&D chief Heinz-Jakob Neusser was quoted as saying by Reuters.

"VW will conclude an assessment of the country's auto market by the end of the year."

Neusser said it is still too early to say which product VW could use to go in with “but of course we see the potential".

Reuters further quoted a company source as saying that VW was considering a move into Iran with the mass-market Skoda and Seat brands.

Financial Tribune contacted the German carmaker for further comment on the possible deals, but the group did not respond at the time of going to print.

Volkswagen’s last venture in Iran involved its production of the Gol compact with Iran’s Kerman Motor before withdrawing under US pressures.

In February, the Tribune reported the car group would be allowed to set up operations in Iran as long as it meets strict new requirements, Iran's Minister of Roads and Urban Development Abbas Akhoundi said in a meeting with the VW board of directors.

"If Volkswagen brings the knowhow and platforms of cars that are in high demand to Iran, the company will be permitted to manufacture here," he said.

According to the ministry's press release, the delegation headed by VW Chairman Herbert Diess met with Akhoundi who was pitching in for Industries, Mining and Trade Minister Mohammad Reza Nematzadeh.

By law, the Ministry of Roads and Urban Development is not entitled to set automotive policies or sign such deals. At the meeting, Akhoundi said several European auto firms are vying to gain a foothold in Iran.

"VW is welcome to set up a central representation in Tehran and attend to the automotive needs of the country," he said.

The minister added that the company has the option of setting up a services and logistics center in free trade zones that will be established near Imam Khomeini International Airport, south of Tehran.