Scania Trying to Keep Trucks, Buses on Iran’s Roads Despite US Sanctions

In the face of the upcoming US sanctions, Scania’s chief says the company is working on a contingency plan so as to deliver shipments of spare parts to its Iranian partners in an effort to help them keep its trucks and buses on Iranian roads up and running.

Henrik Henriksson says the German truck maker is monitoring the Iran situation closely, striking a precautionary note that US sanctions can jeopardize the company’s operations in Iran.

He was speaking with Reuters a day after the firm’s first-half results indicated a decline in its Iran sales.

The Volkswagen owned Scania is one of the leading foreign truck makers present in Iran, selling 5,000-6,000 trucks and buses annually, according to Henriksson. That represents about 5% of its global vehicle orders of 109,415 last year.

 Damage Control

According to Henriksson, Scania’s entire sales into Iran could be lost if the United States reinstates sanctions against the country. However, he says the firm is on damage control, indicating that Scania is trying to preserve its ties with Iran.

He further noted that Scania had canceled all orders that it could not deliver by mid August as anything after would have been hit by the upcoming US sanctions. “As it is right now, it’s a wind-down window of getting orders out that were in before a certain date and getting payments in as much as you can,” he said.

“Looking at the information we have on hand today, of course if nothing is improving, then [our] whole volume will be in jeopardy,” he added.

Scania declined to comment on how much of an impact the decline in orders from Iran, considered as one of their growth markets, had on first half results.

The company’s factories in Latin America and Europe are used to produce vehicles for Tehran and it distributes trucks and buses through local partners, which also own Scania’s production and extensive servicing network in Iran.

 First Comer

Scania was one of the first truck companies to return to Iran after the EU lifted sanctions in early 2016 after the historic nuclear deal was implemented.

Despite the efforts of European governments to salvage the nuclear deal and provide guarantees to European firms to protect them against secondary US sanctions, many of them are leaving Iran anyway to avoid any possible US penalties.

Such a move would be another blow to the Iranian car industry which had managed to sign contracts with top European firms after the lifting of sanctions in 2016, attracting sizable foreign investment.