Iranian Cars driving into the Market: The Price of "Persian Exotics" - ecommotors

The automotive industry in Iran boasts a rich history, marked by iconic models like Paykan and Saipa Pride. Following these, Iran ventured into producing Peugeot and Samanda models. The Saipa Tiba emerged as the top-selling brand in Iran, evoking a sense of nostalgia among Iranians when recalling the first domestically produced sedan, Paykan, which rolled off the production line for 38 years. However, the mid-’90s saw a shift with the introduction of Saipa Pride, leading to a significant era in Iran’s automotive industry. Fast forward to 2005, Saipa sold 2.5 times more than its competitors, signaling a transformative period. Now, with the potential introduction of Russian-manufactured or assembled cars in Iran, a new chapter in Iranian automotive history might unfold.

Iran’s automotive industry has also explored foreign technologies and models, with over 25 car manufacturing companies currently operating in the country. Iran Khodro remains the largest and most significant, offering a range of both national and globally-inspired models, including collaborations with Peugeot.

Russian Venture and UK Prospects

The commencement of Iranian car sales in Russia was scheduled for June this year, with a £600 million contract spanning three years. The deal aims to deliver 45,000 cars from Iran Khodro and Saipa to the Russian market, including 10,000 in the first year alone. This marks a significant step towards mass sales of Iranian automotive products in Russia. The models set to enter the Russian market include Shahin, Saipa, and Quick. Shahin, based on the Toyota Yaris, is anticipated to compete with Russia’s Lada Vesta in terms of technical specifications and pricing.

This development arises amidst escalating Western sanctions against Moscow, prompting Russian automotive enthusiasts to consider not only Chinese but also Iranian cars. The first batch of Iranian cars was expected to arrive in Russia in June 2023. Iran Khodro and Saipa strategically highlighted Russia as a key partner in export-import relations during the Moscow International Automobile Salon 2022.

Despite the potential in the Russian market, Iranian car manufacturers are likely to face stiff competition from Chinese counterparts. Of the £600 million distribution contract, £200 million is allocated to Iran Khodro. Industry experts believe that Iranian manufacturers might encounter substantial competition from Chinese brands in Russia.

However, the three Iranian car models boast competitive advantages. Notably, all three come equipped with front airbags across all configurations, and ABS locking systems are built-in by default. Additional features include a CVT transmission for significant fuel savings and smooth driving. Overall, these models present clear and straightforward options for economical-class cars.

Despite their merits, there are drawbacks. Saipa offers a two-year or 80,000-kilometer warranty, subject to negotiation for potential extensions. Geographically, the initial sales stage encompasses Saipa and Iran Khodro dealer centers only in the European part of Russia.

In the UK the shift towards considering Iranian cars could signify a diversification in the market. The potential introduction of Iranian models, particularly Shahin, into the UK market might present consumers with alternative options in the economical car segment. However, it remains to be seen how the Iranian cars will fare against existing brands in the UK, considering factors such as consumer preferences, emissions regulations, and market competition.

Expansion into Belarus and Iranian Export Endeavors

Iran is making substantial strides in its global automotive presence. In addition to the venture into Russia, Iranian Minister of Industry, Mines, and Trade Seyyed Reza Fatemi Amin announced the export of 45,000 SAIPA vehicles to Belarus in the next three years under a $450 million contract. This move comes as Western-brand automakers abandon operations in both Belarus and Russia as part of the economic backlash to the Russian invasion of Ukraine.

Three car models, including the Shahin based on a Toyota platform, the Kwik hatchback, and Tiba sedan model built on an Iranian platform, will be exported to Belarus. The deal aims to tap into the void left by European and Japanese brands and further establishes Iran as a key player in the post-sanction automotive landscape.

This ambitious export initiative follows a series of agreements signed between Belarusian President Alexander Lukashenko and Iranian counterpart Ebrahim Raisi during a recent visit to Tehran. These agreements aim to resolve permitting difficulties, such as certification, facilitating the planned export of SAIPA vehicles to Belarus.

However, SAIPA faces challenges in these new markets. Competing with low-cost Chinese imports and Russian carmaker AvtoVAZ, which produces Lada vehicles, requires strategic positioning. One notable drawback for SAIPA is the lack of testing its cars in harsh Russian winter conditions, presenting a potential hurdle.

As Iranian cars embark on a journey into new markets, the automotive landscape witnesses a significant shift. The entry into Russia and Belarus opens doors for Iran to establish itself as a prominent player in regions where Western brands are retreating. The competitive advantages of Iranian models, combined with strategic collaborations and agreements, position the country as a resilient force in the global automotive arena.

As the sole provider of integrated ecommerce services and software systems for automotive parts, tools, and accessories, ecommotors can contribute to enhancing the customer experience, optimising operations, and generating new revenue streams. Contact ecommotors today to explore a world of opportunities in the evolving automotive landscape!

To find out more about the automotive aftermarket, or for a no-obligation introductory discussion, please contact us.

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