News ID: 301908
Published: 0140 GMT April 06, 2021

Iran to manufacture cars in Russia as Tehran eyes Eurasian market

Iran to manufacture cars in Russia as Tehran eyes Eurasian market

Iran is eyeing the Eurasian market, hoping to produce low-cost cars in countries such as Russia, Iran Khodro Company (IKCO) head of operations in Asia, Europe, America and the Commonwealth of Independent States (CIS) said.

We are trying to produce cars in Russia in classes in which there is less competition,” Sabina Nobari told Iran Economic News Agency.

The largest carmaker in the Middle East is counting on Eurasia Expo 2021 — to be held through May 18-21 in Tehran — to expand its footprints in a non-Western region which is emerging as a new center of partnerships, Press TV reported. 

Eurasia is rising as a new trend which is marginalizing Europe and the Western liberal order, while resurgent powers China and Russia are linking regional integration projects through the Belt and Roads Initiative (BRI) and the Eurasian Economic Union (EAEU).

Iran is a potential major player in both projects. The Middle Eastern powerhouse is a key destination in the trillion-dollar BRI, spearheaded by China, which involves huge infrastructure projects connecting Asia to Europe and beyond. The country is also a candidate for joining the EAEU, a Eurasian trade bloc with an integrated market of 180 million people headed by Russia.

A preferential trade agreement between Iran and the EAEU came into effect in April 2020 and the Islamic Republics transactions with the block in six months topped $1.7 billion.

We hope to increase our relations with the member countries of this union so that after tariff liberalizations in the next one and a half to two years — when cars are to be added to the list of tariff-free goods — we can produce cars in the classes in which there is less competition in Russia,” Nobari said.

Russia can also produce cars in classes of lower production in Iran,” she added.

In the past, Russian officials have said the countrys largest carmaker AvtoVaz was in negotiations with its Iranian counterparts for the assembly and sale of cars in Iran.

AvtoVaz, majority-owned by Frances Renault and its alliance partner Nissan, produces Russias best-selling Lada brand.   

Both Renault and its competitor Peugeot-Citroën put their development in Iran on hold after the US unilaterally imposed sanctions on the country. Other international companies also dropped plans to expand their Iran business.

In their absence, Irans massive automotive industry went through a period of turbulence as foreign companies stopped supplying pre-manufactured kits for cars assembled in the country.

As a result, Iran Khodro and its Iranian competitor Saipa pooled up local manufacturers of parts to produce cars as the defense ministry joined in to manufacture hi-tech auto parts which Iran used to import.

This year, Iranian automakers are about to produce more than 1.3 million cars, marking a 50 percent jump in production in the face of US sanctions, a deputy industry minister said in December.

Nobari said Iran Khodro has exported 5,000 cars to neighboring Azerbaijan in the past two years, including Iranian saloon Samand, Dena family car and Peugeot 405 passenger car.

For the Russian market, we mostly try to play a role in producing economy cars like Dena, Samand and Runna, while Tara is also a good and new car”, she added.

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