Mercedes-Benz Investment in the Automotive Industry in Iran

Mercedes-Benz is preparing to resume the production of heavy and light vehicles in Iran after about a year of negotiations with Iran Khodro and Iran Khodro Diesel. Hashim Yekeh Zareh, CEO of Iran Khodro Industrial Group, stated, "The cooperation agreement between Iran Khodro and Benz is nearly finalized and will be signed within two months. According to this agreement, two joint companies will be established in the fields of 'production' and 'sales and after-sales services' with Benz, where Iran Khodro will hold 51% and Benz 49% in the production company, and the shares will be reversed in the sales and after-sales services company." In 2005, Iran Khodro reached an agreement with Benz to produce passenger cars in Iran, and production of the E-Class Mercedes under strict supervision began, with plans to produce the C-Class as well. For this purpose, Mercedes-Benz had fully purchased the shares of the Star Iran company for the sales and after-sales services of the produced Mercedes in Iran. However, with increasing tensions between Iran and the West, Mercedes-Benz, under pressure from the German government, was the first company to leave Iran before sanctions were imposed. Mercedes-Benz had invested in the passenger and heavy vehicle sectors during Mohammad Khatami's presidency, increasing its investment in the IDAM company for producing Benz engines and directing the German company ZF towards investment in Iran for producing Benz gearboxes. After the sanctions were lifted, the German holding Daimler, which owns Mercedes-Benz, signed the first memorandum for the resumption of its products in Iran with Iran Khodro Diesel. In this memorandum, Mercedes-Benz is set to invest directly in Iran and establish a joint company with Iran Khodro Diesel. Stefan Gushner, a senior manager at Mercedes-Benz, stated, "In the supply of heavy Benz products in Iran, new products with the latest technology will be introduced, which will have minimal emissions and reduce harmful gas emissions. We are committed to localizing our production in Iran and transferring technology." Daimler, Germany, owns several subsidiaries and major automotive brands such as Mercedes-Benz, Mercedes-AMG, and Smart. On January 17, 2016, Daimler, as the largest truck manufacturer in the world, signed a memorandum of understanding with Iran Khodro, the largest automaker in the Middle East, agreeing on "joint investment for regional production of Mercedes-Benz trucks and powertrain components," "establishing a joint company for the sales of Mercedes-Benz trucks and their components in Iran," and purchasing part of the shares of the "Mahvar Khodro" company alongside "IDAM" (Iran Diesel Engine Manufacturing). Iran Khodro and Daimler aim to establish two joint companies to leverage each other's relative advantages and create a commercial vehicle production hub in the region. Daimler has announced that its truck division has signed a contract with Iran Khodro, which is part of the company's plan to re-enter the Iranian market. Daimler has also announced that it has signed a contract with two companies, Iran Khodro Diesel and the Mamoot Group (a trailer manufacturer in Iran), to establish a joint company and launch the production unit for Benz trucks and their powertrain components. During Mahmoud Ahmadinejad's eight-year administration, the activity of major truck manufacturers in Iran decreased, with Chinese manufacturers like Howo and Dongfeng replacing major automakers like Volvo and Benz. This led to problems in Iran's ground transportation industry and made roads unsafe. According to the Iranian Minister of Roads and Urban Development, there are currently over 127,000 aging trucks over 25 years old operating on Iranian roads. After the nuclear agreement, it has become clear that four major truck manufacturers, Volvo, Mercedes-Benz, Renault Trucks, and Scania, are preparing for a significant presence in the Iranian market. Two other companies, MAN from Germany and Iveco from Italy, are also likely to join this group. Among these companies, Volvo, Mercedes-Benz, and Scania intend to turn Iran into their production base in the Middle East.