Daimler vows to take China off Iran roads

July 2, 2016 12:30 pm

European automakers see a pent-up demand for car sales in .

Daimler says its trucks division will start the deliveries of Mitsubishi Fuso brand in Iran later this year. 
The
German carmaker and Iran’s Mammut Group signed a distribution agreement
for Fuso trucks, especially in the light-duty segment, back in January
as the West lifted its sanctions on the Islamic Republic.
To
redeem the lost ground in the reopened Iranian market, Daimler has to
fight now-entrenched Chinese rivals, with trucks division head Wolfgang
Bernhard saying the company will not secede business to the Chinese.
Two
days after the lifting of economic sanctions against Iran in January,
Daimler had signed letters of intent for the establishment of joint
ventures in the Middle Eastern country.
Bernhard said Daimler’s
market launch in Iran will initially begin with complete deliveries
under the agreement signed between the two sides.
“We want to
gradually switch to locally produced parts of motors, transmissions and
axles up to complete lorries,” he told Germany’s monthly business
Manager Magazine.
However, the financial strength of Iran is not
yet sufficient to quickly stimulate the and so to foment demand
for trucks. However, in the long term Iran could be a similarly large
market such as Turkey where Daimler sold 20,400 trucks last year,
Bernhard said.
Fuso, once a Mitsubishi brand, is majority owned by Daimler since 2011.
In
Iran, Daimler has a long history. The carmaker, interrupted only by the
sanctions from 2010 to 2016, has been present in the market with
Mercedes-Benz trucks and passenger cars since 1953.
Before the
sanctions, Daimler sold up to 10,000 vehicles in Iran annually by its
own account. Daimler estimates that Iran needs to replace 56,000
commercial vehicles over the next three to five years.
The
carmaker’s re-entry plans for Iran also include establishing a joint
venture with Iran Khodro Diesel for local production of Mercedes-Benz
trucks and powertrain components, plus the establishment of a sales
company for Mercedes-Benz trucks.
Daimler also plans to return as a shareholder in the former engine joint venture Iranian Diesel Engine Manufacturing Co. (IDEM).
The
company has said the first Mercedes-Benz Actros and Axor trucks could
be supplied to the country in the form of CKD (completely knocked down)
kits or fully disassembled before the end of the year.
Officials
of Mercedes-Benz passenger cars have also said the luxury automaker was
preparing to re-enter Iran’s market but they could be facing major
challenges given the country’s austerity plans as part of its “economy
of resistance.”
European carmakers view Iran as a major market
with a pent-up demand as they face serious slowdown and layoffs in more
established markets.
They are also faced with aggressive Chinese
manufacturers making inroads in and Africa where Daimler and others
are pushing for growth and struggling to keep sales and profit steady.
“The difficult market conditions we’ve seen last year have become more difficult,” Bernhard was quoted as saying in February.
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