Trouble in paradise: Dark days ahead for Chinese carmakers in Iran
Baku, Azerbaijan, March 4
By Farhad Daneshvar - Trend:
Following the removal of international sanctions against Tehran and the entry of giant carmakers to the sanctions-worn country, Chinese carmakers see their market share in the Islamic Republic at stake.
Over the past decade and during the sanction's era, giant carmakers, such as Peugeot, left the Islamic Republic leaving Iranians with few options to buy cars, either home-made or Chinese ones.
Due to the low quality and high prices of the homemade cars, cheap Chinese cars such as Chery, soon became popular among Iranians.
Dozens of reported fire incidents in the unqualified Iran Khodro products because of technical faults, as well as increased number of casualties in car accidents due to low safety qualities of the cars produced by SAIPA, an Iranian major car maker, were among the main reasons for Iranian costumers to turn to Chinese cars.
However, with the return of giants to Iran, the jubilant Chinese carmakers are running into trouble in their paradise.
Apparently, Peugeot, which is famous among middle-class Iranians for its quality, is going to regain market share in Iran.
One of the first post-sanctions contracts signed between an Iranian and a foreign company is the contract between major Iranian car manufacturer Iran Khodro and the French Peugeot.
The deal stipulates the production of three models of Peugeot in Iran through a 50-50 venture.
Iran Khodro has been manufacturing two models of Peugeot for several years, so much so that these two models have become prototypical cars in the minds of many Iranians.
The company started manufacturing Peugeot 405 around the year 2000. The production still continues, though at much lower quality.
A few years later, Iran Khodro added Peugeot 206 to its products, which is also still being manufactured, again at lower quality. The Iranian "national vehicle" Samand is also a reshaped Peugeot 405.
Mercedes-Benz, a multinational division of the German manufacturer Daimler AG, and France's Renault are also among the world's major carmakers eyeing Iranian market.
Meanwhile, Iranian officials, now confident of having giants in the country, have recently introduced new standards to increase the quality of cars in the market.
The officials are urging foreign carmakers, who fail to observe the country's new regulations and standards, to leave the market - what actually means China, Iran's traditional partner, has two choices, either to leave the country or review the quality.
"According to the latest policies of the Ministry of Industry, Mining and Trade, the foreign carmakers that fail to observe Iran's regulations and standards should be eliminated from the country's market," ILNA news agency quoted Arash Mohebbi-nejad, the secretary general of Iran's Auto Parts Manufacturers Association, as saying March 4.
"If the Chinese carmakers operating in Iran fail to observe the regulations, they will have no place in the market," he added.
Farhad Daneshvar is Trend Agency's staff journalist, follow him on Twitter: @farhad_danesh