Mercedes-Benz Passenger Car Production in Iran

Iran Khodro Company plans to start the production of Mercedes-Benz passenger cars in Iran from early 2018, with the first product being the C-Class Mercedes-Benz. Approximately 2,500 units of this German company's products are expected to be produced in Iran in the first year. In November 2016, there were murmurs about the production of some German products from companies like Benz, BMW, and Volkswagen in Iran, but this has not yet happened as German companies are assessing the political conditions and industrial infrastructure in Iran. According to ISNA, at the beginning of this decade, the automotive industry was not in good shape. Most prominent European and Asian partners had left the Iranian automotive industry, and domestic automakers had to rely on Chinese manufacturers. Final agreements between Iran Khodro and Daimler for the production of Mercedes-Benz passenger cars in Iran have been reached, and production will begin in early 2018 with a local content of over 20%. Given that Mercedes-Benz passenger cars were produced in Iran about two decades ago, the production line for this product is currently being updated and prepared. Iran has previous experience in producing and assembling Mercedes-Benz products; initial negotiations for the entry of Stuttgart cars began in 2001, and from 2002, the 'Star of Iran' company began operations as a representative of Daimler, the owner of Mercedes-Benz. By 2006, Iran Khodro had planned to produce the E-Class body to be manufactured at the 'Top Khodro' company. Mercedes-Benz is one of the oldest automakers active in the Iranian market, with production of its buses and trucks starting in the early 1960s, even before the production of the Peykan. Before the revolution, the company had also invested in the production of its engines in the 'Idem' company in Tabriz. After the revolution, Mercedes-Benz's activities in Iran slowed down, but they did not stop even during the war, and during Mohammad Khatami's presidency, the company's activities in Iran increased. During Khatami's presidency, Mercedes-Benz invested in both passenger and heavy vehicle sectors in Iran. The company also made a direct investment by fully acquiring shares of the Star of Iran company to produce the E-Class and C-Class Mercedes cars. Iran was supposed to become the center for Mercedes-Benz production in the Middle East. Production of E-Class models had started, but with the rise of Ahmadinejad's government and the deterioration of relations between Iran and Germany, production significantly decreased, and shortly before sanctions were imposed, the company left Iran. Now, Mercedes-Benz intends to start assembling several passenger models in Iran and revive the unfinished project of its first passenger car factory in the Middle East, which was halted during Ahmadinejad's presidency. Mercedes-Benz's activities in Iran have historically been different from other German companies. Even before the revolution, all German companies viewed Iran merely as a market, but Mercedes-Benz aimed to turn Iran into its production hub outside Europe. The company even designed the G-Class for the Iranian army at the behest of the Shah before the 1979 revolution, but after the revolution, this product never reached the Iranian army and became the main light transport vehicle for NATO.