Volvo Trucks to Increase Investment in SAIPA Project

The president of Volvo Trucks says that the Gothenburg-based company will increase its investments in Iran.

During a visit to Tehran, Claes Nilsson told ISNA, “In 2016, Volvo Trucks invested $6 million in Iran.”

That amount was for enhancing the production lines of FH models assembled in the country in collaboration with SAIPA Diesel.

“So far Volvo Trucks has invested $55 million in Iran and this will increase significantly in the future,” he was quoted as saying.

Volvo Trucks and SAIPA Diesel have a three-decade history of collaboration. Earlier in July, the two sides signed a deal under which 3,500 Volvo FH heavy goods vehicles will be assembled in Iran during the current fiscal that ends next  March. As per the agreement, 5,000 trucks will be assembled next year.

 Localization

Localization and technology transfer through automotive deals have been on top of government’s agenda in recent years to develop the key auto industry and create jobs.

Referring to the officials’ oft-mentioned mantra, Nilsson said the prominent Swedish truck manufacturer will make certain to comply with the rules.

“Currently, only 20% of the parts used in the FH models are manufactured locally. We are planning to raise this to 30% next year and the share will increase gradually.”

“Volvo Trucks has already invested in the local production of cabins for the FH models,” Nilsson added.

He noted that talks are underway with SAIPA Diesel to expand collaboration and the two plan to sell a wider range of products in the near future.

SAIPA Diesel has been producing and assembling FH and FM models for over a decade.

 Tough Competition

The global truck maker faces strong competition from Scania and Daimler AG, which are also active in the local market.

Scania – the Sweden based company has had a strong presence in Iran through its official representative and local assembler Mammut Diesel. According to the company’s website, 990 trucks were delivered to Iranian buyers in 2016.

In January, Mammut, Scania and Iran’s Road Maintenance and Transportation Organization signed a trilateral agreement to replace 5,000 old trucks with  Scania models. Through the deal, loans will be offered to purchase the new vehicles.

Daimler – The German truck manufacturer reached an agreement with Iran Khodro Diesel, a subsidiary of Iran Khodro, in September to export heavy-duty vehicles and produce/assemble Daimler trucks in Iran.

Two other memoranda of understanding were signed between IKD and Daimler. One calls for the establishment of a joint company for sales of Daimler trucks in Iran and the other says the two will discuss prospects for reviving the Iranian Diesel Engine Manufacturing Company (IDEM), another subsidiary of IKCO.

Cognizant of the rivalry for a bigger slice of the truck market, Nilsson said by  offering incentives to truckers, his company would secure its footprint in the market and is planning to expand its after-sales services in Iran.

“We are trying to offer products in Iran with the same quality that is on par with our vehicles sold in European markets.”

Similar to Scania, Volvo Trucks and its local partner have signed an agreement with RMTO. The deal, in the first phase, calls for replacing 600 trucks older than 35 years to be replaced with new Volvos.

 Lending Plan

Nilsson attended a ceremony at SAIPA Diesel premises on the occasion of the delivery of the 75,000th locally-assembled Volvo truck to an Iranian customer and held talks with SAIPA Diesel CEO Rasoul Mohammad Sadeqi.

Sadeqi was later quoted as saying that his company is planning to give loans at interest rates lower than 10% for purchasing Volvo FH trucks.

Most truckers who have borrowed in the past to buy from other truck manufacturers often complain about the high interest rates of banks they insist are “prohibitive”.  This is the main reason why truckers make do with dilapidated vehicles built four and five decades ago and cannot afford new trucks.

The SAIPA boss said the company is anticipating to also export commercial vehicles assembled under the Volvo license.

“SAIPA Diesel wants to become Volvo Trucks regional hub and vehicles will be exported to neighboring countries and North Africa markets.”