Scania to Invest in Iran

The Swedish company Scania, a subsidiary of the Volkswagen Group, has a comprehensive plan to invest in the production of trucks and buses in Iran. This company is collaborating with Mammut for truck production and with Oghab Afshan for bus and minibus production in Iran. Following the nuclear agreement, several senior Scania executives have visited Iran, and during the latest visit, the CEO of Scania promised investment in Iran. Henriksson, the CEO of Scania, stated: "Scania Sweden will invest in the production of buses and minibuses in Semnan, and the process of bilateral cooperation between Scania and Iranian companies in the construction and equipping of the road transport fleet will increase. The Swedish company is looking to source parts for Scania minibuses from Iranian automotive companies to eliminate the need for purchasing parts abroad, given the quality of Iranian-made goods; this production could also pave the way for the extensive export of these products worldwide." The CEO of Scania, while referring to the lifting of Western sanctions against Iran and the ease of economic exchanges between the Swedish and Iranian sides, said: "Iran has significant economic capacities that encourage any company or country globally to increase investment in this country; therefore, Scania is not an exception to this rule, and we hope to further increase the volume of exchanges between the two countries. Currently, Scania's studies show that the products manufactured by this company in Iran are of the best quality among Scania product manufacturers worldwide. Scania is a well-known manufacturer of passenger buses globally, and with the planning done and increased cooperation among major automotive companies in Iran, we could see the export of buses from Oghab Afshan to European and Western Asian countries by the end of 2016." In addition to bus production, Scania also has extensive plans for producing its new generation trucks in Iran. One of the products that Scania has planned for Iran is the R560 tractor unit. This 8-cylinder tractor has Euro 5 emissions standards and a power output of 560 horsepower. The CEO of Scania stated at the unveiling of this product at Mammut: "Iran has gone through tough years and has done great work during this time. We stand firmly behind Mammut, and this company, in turn, stands behind its customers. I hope Scania, Mammut, and customers can be like a family, and Iran can be Scania's country." He had previously stated, "We intend to make Iran a center for exporting our products in the region." After the nuclear agreement, major truck manufacturers like Volvo, Mercedes-Benz, and Scania have developed extensive plans for producing their products in Iran. During the eight years of Mahmoud Ahmadinejad's presidency, the activities of major truck manufacturers in Iran declined, and the production of major manufacturers like Volvo and Benz was replaced by low-quality Chinese products like Howo and Dongfeng. This led to significant problems in Iran's ground transport industry and made the roads very unsafe. In recent years, issues with the brakes of Howo trucks, which were assembled in Iran Khodro Diesel, have caused numerous fatal accidents on Iran's roads, leading to Howo trucks being dubbed "death carts" on intercity roads. If you travel on many roads in Iran in recent years, you can see remnants of various Chinese trucks that have gone off the road. With the imposition of sanctions, the limited cooperation of companies like Renault Trucks and Volvo with Iran was effectively cut off, and for several years, Iranian companies became a playground for low-quality Chinese truck manufacturers. The decline in the power of the transportation system in Iran due to economic reasons has also harmed Iran's transit fleet, and the decrease in purchasing power due to the economic crisis and recession has complicated the cycle of retiring old trucks in the country. According to the Iranian Minister of Roads and Urban Development, there are currently more than 127,000 old trucks over 25 years old operating on Iran's roads. Abbas Akhoundi, the Minister of Roads and Urban Development, stated: "In the country's road transport fleet, 127,000 trucks over 25 years old are in operation. These trucks have high fuel consumption and create significant pollution. If these trucks are retired and replaced with standard and new models, energy consumption in this sector will be halved. The money saved from energy consumption can quickly repay the costs incurred. Additionally, the environmental situation will improve. However, renewing the road fleet will cost several billion dollars - just for trucks, more than six billion dollars in credit is needed - which we cannot and do not intend to cover entirely from domestic sources. A specific contractual model should be designed that should revisit leasing and lease-to-own arrangements. The issue is that the investor of this plan must be able to secure initial financial resources from the global financial system. Ultimately, there should be partnerships with domestic companies in the construction of these trucks, and then the trucks should be leased so that the costs can be amortized from their leasing. Given this extensive capacity, major truck manufacturers worldwide are currently expressing a desire to return to Iran. Companies like Volvo and Benz, which have previously had Iran as one of their main production hubs globally, are now returning to the Iranian market. Between 2001 and 2005, Iran became one of the top five Volvo truck production sites in the world, and even the production of this company's trucks in Iran reached about 12,000 units per year. Truck production in Iran in 2005 was about 30,000 units, most of which were manufactured by prominent companies like Mercedes-Benz, Volvo, Renault Trucks, and Iveco, while this number dropped to about 14,000 units in 2013, with a significant portion of the production being Chinese trucks. Chinese trucks, besides their low safety and high fuel consumption, are very quickly damaged due to their poor quality and incur higher repair costs compared to trucks from well-known global companies. Following 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.