Iran Car Market Will Grow Again When Sanctions Expire

Iran Car Market Will Grow Again When Sanctions Expire.

Peugeot, Renault Ready To Go.
China Has Already Entered Market With Importer Network.

Car sales in Iran are likely to accelerate when sanctions are lifted later this year or early in 2016, with Chinese automakers in the fast lane along with other Asian manufacturers, a report from IHS Automotive said.

Annual sales could reach 1.7 million in the longer term, according to IHS Automotive, although it didn’t offer any firmer timetable.

In mid-July Iran, and China, France, Russia, Britain the U.S. and Germany reached a draft agreement which is expected to see Iran reduce its nuclear weapon activities in return for the gradual ending of economic sanctions.

“Having previously estimated that light vehicle sales would grow in Iran by around 12.5 per cent year on year to 1.3 million during 2015, we now anticipate that there will be a surge in “unofficial” imports into the country,” IHS Automotive said.

IHS Automotive said a more significant impact is expected from mid-2016 or 2017, with an additional six to eight percentage points added to its forecast resulting in an average 10 per cent year on year growth rate until the end of 2017. IHS called this a “cautious baseline” because of several factors, like the unstable situation in Syria, Iraq and Yemen, the weak Iranian economy with 12 per cent unemployment and inflation of 14.5 per cent. The Iranian government may also limit imports to give domestic manufacturers a chance.

“Among beneficiaries of this are likely to be Chinese automakers, which already have a strong network of importers in Iran. Other Asian manufacturers such as Hyundai, Kia and Toyota also look set to benefit given their strong position in neighbouring Gulf states. However, official imports may take longer to take off as automakers wait for the adoption and implementation phase of the agreement, which is expected to take a minimum of 90 days,” IHS said.

Peugeot ready to return
Peugeot Citroen has already confirmed it is in talks with Iran to resume operations. It was the leading foreign importer until sanctions were imposed in 2011. Renault is also keen to move in, with its ready-made Dacia brand. VW said it was also talking to Iran about doing business in Iran.