AvtoVAZ can replace Western carmakers in Iranian market

AvtoVAZ can replace Western carmakers in Iranian market Photo: Valera N. Trubin

The producer of Lada vehicles is considering assembling cars in a number of foreign countries including Iran. The Islamic republic is currently under severe US sanctions, which oppress Iran's automotive industry as well as other economic sectors.

Russian AvtoVAZ car manufacturer is in talks with Iran over the opportunity of assembling and selling its cars in the country, says Caspian News. Iran's automotive industry is facing difficult times due to US sanctions. Since the introduction of the latest round of restrictions, about 100,000 people in the local auto industry have lost their jobs.

The output of local carmakers Iran Khodro and SAIPA has plummeted significantly, while many auto parts manufacturers have had to shut down completely. The two key car producers are supposed to receive a loan of 40 trillion rials ($333 million) from the government, but this money will be used to repay part of the carmakers' mounting debt to Iranian parts makers. According to Secretary of Iran Auto Parts Manufacturers Association Maziar Beiglou, Iran Khodro and SAIPA ''owe local parts manufacturers some 140-150 trillion rials ($1,16-1,25 billion)''. Local automakers have not paid parts makers a dime over the past four months, said Beiglou.

As for foreign producers, French Renault and PSA Group (Peugeot and Citroën) abandoned the Iranian market last year after the United States re-imposed its sanctions. Some observers then supposed that Chinese companies would take their place. China's Cherry offers a wide range of cars in Iran. The company entered the local market 15 years ago under the brand name Modiran Vehicle Manufacturing Co., and since 2015 it has also used its own logo in the country. However, official data showed that in March-December 2018, the number of cars made in Iran in collaboration with Chinese firms decreased by 9,9% compared to the corresponding period of 2017.

Iran Khodro assembly line. Photo: Hamed Jafarnejad/Tasnim News Agency

According to Director for International Cooperation and Regional Policy at Rostec Viktor Kladov, Russian manufacturers AvtoVAZ and KAMAZ are currently rather active in foreign markets. KAMAZ is already working in Iran as well as in India, Pakistan and the United Arab Emirates. Besides, the company has established joint ventures in Uzbekistan and Kazakhstan. ''AvtoVAZ has been assembling its cars in Egypt. Negotiations are underway with a number of other countries, such as Iran,'' said Kladov on the sidelines of Aero India Show 2019 on 20 February.

In 2018, export sales of Lada vehicles made by AvtoVAZ grew by 57% to 38,050 cars. The vehicles were sold in 34 countries including Turkey, Tunisia, Chile and Cuba, said the carmaker's Vice President for Sales and Marketing Jan Ptáček. Nonetheless, countries of the Commonwealth of Independent States are currently accounting for the bulk of the carmaker's sales: last year, over 26,300 cars were sold in Kazakhstan, Belarus and Uzbekistan. Lada Vesta became the leader in export sales in 2018 outpacing the previous leader, Lada 4x4.

By Anna Litvina
Events