How will the Iranian automobile market look like in 2018?
Iran automobile industry is preparing for the arrival of the new foreigner products while it seems that this market is going to face big changes in the next two years. After the Iran nuclear deal, Iranian car manufacturers started negotiating with international companies, and number of deals and agreements have been signed since then.
According to this, till today a contract between Iran Khodro (Iran largest car producer in Iran, ME, central Asia and North Africa) and Peugeot (French car manufacturer), and an agreement between SAIPA (Iran second largest car manufacturer) and Citroen has been signed.
And some say that Renault is going to start its production in Iran very soon.
Hence it is predictable that in the next two years foreign car manufacturers are slowly entering into Iran automobile industry, therefore this market is going to have some fundamental changes in the year 2018.
Although after the nuclear deal, Iranian consumers were expecting cheaper vehicles in the market, nevertheless most of the products that have been targeted, are priced above 50 million Toman (equivalent to $12,500). Yet it seems that the foreign car manufacturers are considering one or two products that are below 50 million Toman. It is not clear from which car manufacturer we are going to see these products.
If we have a general view on the future of Iran automobile industry, we can understand that most of these products are ranged between 50 to 100 million Toman, and the market for ranges below 50 and above 100 Toman have lower density in terms of products variety.
Competitive advantage for the market of below 50 million Toman
Although the agreements and contracts with foreign car manufacturers after the nuclear deal could not satisfy the needs of the main part of the consumer market (below 50 million Toman), with one or two cheaper products it might make a significant effect on this market.
Based on the recent news Renault is planning to enter this market with its cheaper vehicle name ko’d, which might be available in early 2018. Although it is not very clear how much it will cost in Iranian market but there are rumors that this car will be priced around 25 to 30 million Toman. The quality of built and the appearance of this car convinced the two largest car manufacturers in Iran to start negotiation with Renault, which might be the best option for consumers for the price range of below 50 million Toman.
If Renault ko’d enter the Iranian market with the predicted price range, together with Nissan and Fiat affordable vehicles within the similar price range, the main chunk of the Iran automobile industry is going to face significant changes in the year 2018 and possibly the elimination of older products. The changes in 50 million Toman market could have a big influence in automobile trading, considering that this price range is making up to %80 of the Iran automobile industry.
The battle between Chinese and French
However most of the cars that are going to enter Iran’s automobile market have a price range of above 50 million Toman, therefore the market for the price range between 50 to 100 million are going to have the biggest changes in the year 2018. Renault, Peugeot, Citroen and possibly Volkswagen and Fiat are the manufacturers that are considering a variety of their products for this price range. Consequently, what it seems certain, is that the face of the Iran automobile industry in the 50 to 100 million Toman is changing considerably, the market price range that we should not forget about the Chinese. We believe that presence of new car manufacturers in Iran, particularly Renault, Peugeot, and Citroen is going to change to circumstances in the favor of French and certainly against the Chinese, however, Chinese might retrieve and become a serious competitor for French car manufacturers.
Luxury market
The market for price range above 100 million Toman has its own consumers, the market that is mostly filled with imported cars. After the nuclear deal, this market is going to face some minor changes, together with the imported car, the local car manufacturers are planning to enter this market with cars such as Peugeot 508 and Citroen C6 which will be available in the year 2018.