Chinese car makers looking for Iran exit door

Iran’s media reported on Sunday that the recent surge in the enthusiasm of European automakers to get a foothold in the Iranian market is already pushing Chinese brands to leave.

ISNA news agency has quoted officials at China’s leading automaker Chery as saying that the company’s share of the Iranian market has decreased over the past year.

They say Chery was previously warmly welcomed in Iran, but there has been a decline in the interest of Iranians toward the company’s products in light of the progress in talks over the country’s nuclear energy program.

Iran and the P5+1 – the five permanent members of the Security Council plus Germany – announced at the end of marathon top-level talks on July 14 that they had agreed on certain restrictions over the Iranian nuclear energy activities in return for the removal of certain economic sanctions against the country.

A key class of sanctions that will be removed will be those that ban foreign investments in the country’s industries including the auto industry.

The exit of Chinese car manufacturers had been expected before with the arrival of global majors, ISNA has further quoted Iranian auto market experts.

“Some Chinese car producers whose products are low quality will eventually have to bid farewell to the Iranian market,” said Shahram Azadi, an economist and a university professor in Tehran. 

“The screw will grown even tighter on Chinese producers if European car manage to provide products to the Iranian market that will be cheaper but would have a better quality,” Azadi added.   

Several top European auto brands have already voiced readiness to venture into the Iranian auto market. They include Renault and Peugeot from France as well as Volkswagen from Germany.

“The presence of leading global auto brands will eventually raise the alarms for both the Chinese and the Iranian car manufacturers,” wrote ISNA. 

“Many experts believe that if Iran Khodro and SAIPA fail to improve the quality of their products, they will have to quit the race in the market in favor of their European rivals”.