Iran is poised to become a major trade and logistics hub, as the government is mooting projects to boost production and improve infrastructures through partnerships with various countries.
According a new report by Frost & Sullivan, the lifting of sanctions has breathed life into the commercial vehicle market, with French and German original equipment manufacturers already in talks with local CV counterparts to begin the process of market reentry. In its Strategic Overview of the Commercial Vehicle Market in Iran, the report finds that the commercial vehicle market is expected to grow to 320,148 units in 2022 from 160,107 units in 2015, at a compound annual growth rate of 10.4%.
The bus segment is likely to grow the fastest at a CAGR of 34.9%. Furthermore, production capacity utilization in the medium and heavy duty truck segment is anticipated to increase from 10% to 15% in 2015 to 60% to 65% by 2022.
“The dominance of local participants and high import duty on completely built units encourage local production and assembling, thereby reducing reliance on imports,” said Frost & Sullivan Intelligent Mobility Research analyst Marshall Martin.
“Iran has regional access to 15 countries and strategically placed free trade zones for exporting, making it an extremely attractive investment destination for CVs.”
While the commercial vehicles have marginally bigger and more powerful engines, they need superior comfort and safety features. Foreign OEMs will look to make the most of this market requirement by establishing common platforms between different regions and save costs and time in developing region-specific products. The Iranian market is currently beset by a shortage of cargo and construction projects, leading to reduced demand for trucks and lower turnover. This situation affects the ability of fleet owners and drivers to repay their instalments.
Overall, with its huge untapped potential, Iran will continue to be the leading market for CVs in the Middle East. The market will become even more competitive by 2022, driven by the rising demand for quality and reliability.
