Germany or Italy: Where Will Iran Khodro's New Partner Come From?

For a long time, the Iranian automotive industry has been criticized for being overly French, with many suggesting that it should seek a new primary partner that is not French. Following the nuclear agreement, reports have emerged that Iran Khodro is looking for collaboration with a non-French European automaker. It has been confirmed that the contract with Peugeot is nearing completion for the formation of a joint company. According to the new agreement, a company will be established with 50% of its shares belonging to Iran Khodro and the other 50% to Peugeot Citroën. For two years, the CEO will be from Peugeot, and the chairman of the board will be from Iran Khodro, and this will reverse after two years. Hashim Yekeh Zareh, the CEO of Iran Khodro, has stated that Peugeot will remain Iran Khodro's main partner. Alongside Peugeot, Iran Khodro's collaboration with Renault will also continue. Cooperation with Suzuki from Japan, which had previously collaborated with Iran Khodro before sanctions, is being pursued but is less prominent compared to the two French companies. A contract with Mercedes-Benz for heavy vehicle production is also nearing completion. However, all these partners had previously worked with Iran Khodro before sanctions. Iran Khodro has announced that its collaboration methods with these automakers will differ in this new phase. In addition to these former partners, Iran Khodro has initiated new discussions with Fiat from Italy and Volkswagen from Germany. Volkswagen was the second-largest automaker in the world and the largest in Europe in 2014. This global automotive giant owns brands such as Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT, Škoda, MAN, Scania, Porsche, Italdesign, and Ducati. The company also has 94 vehicle production plants in 24 countries and 340 subsidiaries. If Volkswagen reaches an agreement with Iran Khodro, it could lead to a fundamental transformation for the company. However, some doubt that Volkswagen's influence will be significant given the extensive lobbying power of Peugeot among Iran Khodro's managers. The influence of Peugeot's lobby within Iran Khodro is so extensive that even after unilaterally withdrawing from collaboration, Peugeot currently has a better chance against its compatriot Renault, which has continued its collaboration with Iran Khodro despite sanctions. Recent news suggests that Iran Khodro may collaborate with Škoda, a subsidiary of Volkswagen. Škoda is an automotive company based in the Czech Republic, established in 1895. In 1991, it became one of the European subsidiaries of the Volkswagen Group and currently designs its products on Volkswagen chassis at slightly lower prices. On the other hand, Fiat stands opposite Volkswagen. Fiat, with ownership of Fiat, Lancia, Alfa Romeo, Ferrari, Maserati, and Iveco, is the main player in the Italian automotive industry. Additionally, it holds significant shares in Chrysler, Jeep, and Dodge in the U.S. This situation led Mohammad Reza Nematzadeh, the Minister of Industry, Mine, and Trade, to deem Fiat's entry into Iran unlikely due to its collaboration with Chrysler; however, he later changed his position during a business conference between Iran and Italy, indicating the possibility of Fiat collaborating with an Iranian company for vehicle production. Hashim Yekeh Zareh has also confirmed negotiations with Fiat for producing affordable vehicles. Fiat has two models, Panda and Fiat 500, which are considered among the cheapest cars in Europe, with prices ranging from 7,000 to 10,000 euros depending on the model. It remains to be seen what prices these vehicles will have if produced in Iran. The Tondar 90, which is the first generation of the Logan car, had a base price of 7,000 euros when launched in Europe, and it is currently offered in Iran for between 30 to 40 million tomans, depending on its various models. In comparing Fiat and Volkswagen, the higher quality and technology level of Volkswagen's products compared to Fiat indicates the superiority of this German automaker over the Fiat group. However, Fiat may be more attractive to the Iranian side for several reasons: First, Fiat offers more affordable vehicles than Volkswagen. Another important point is Fiat's greater flexibility compared to Volkswagen, stemming from the cultural differences between the two countries. Germans are usually more organized and conservative than Italians in industry, which some Iranian industrial managers view negatively for working with Iranian industries. Italian industries typically have many loopholes in dealings with their partners, which may be more appealing to Iranian managers. Lastly, Fiat's collaboration with Chrysler could be seen as both a positive and negative aspect for Iranian industrial managers. The Fiat Chrysler Group was established after Fiat acquired 100% of Chrysler's shares in 2014. Fiat currently owns Chrysler, Jeep, and Dodge, and several Chrysler and Dodge products are produced in Europe under the Fiat or Lancia brands. From this perspective, Fiat could serve as a bridge between the Iranian automotive industry and the U.S., although this could also increase the risks of collaboration between the two parties.