Skoda to Make Low-Cost Cars for Iran

Volkswagen Group’s Czech brand, Skoda, will produce a low-cost car for emerging markets like Iran by 2020.

The news about the push into the Iranian market comes despite the collapse of cooperation talks with India’s Tata Motors, where VW was previously focusing efforts, according to Auto News Europe.

Skoda has developed “a series of ideas” for a cheap car that could be used in several low-cost vehicle markets, said Thomas Sedran, VW Group’s head of strategy.

News about the Mlada Boleslav-based company comes after Skoda and Tata said that talks on a strategic alliance had ended because the two automakers failed to achieve planned cost savings.

In March, the carmakers had signed a memorandum of understanding for a long-term partnership to explore joint development of products for customers in India and other markets.

Meanwhile, the company has been cautiously optimistic about entering the Iranian market over the past year.

In October 2016 Reuters reported Skoda would enter Iran’s growing car market by mid-2017, however to date only Volkswagen and Seat, the group’s two sister brands have begun their operations in the country.

The carmaker has a long history in Iran dating back to pre-1979 with its original showroom now used to host antique models on Taleqani Street in central Tehran.

Bernhard Maier the company’s chief executive said in October, “Skoda will start importing completely built-up cars to Iran sometime next year and has signed preliminary deals with local partners to start semi knocked-down production in the country.”

He did not name the local partners.

It’s not known which models will enter the Iranian market, but the Skoda hatchback Fabia, the seven-seat Kodiaq SUV and large sedan Octavia have been suggested as ideal for the market.