What is Volkswagen Group's Plan for Iran?

The Volkswagen Group, with several automotive brands, intends to increase its activities in Iran, but what is the company's plan for the Iranian market? The Volkswagen Group owns brands such as Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT, Škoda, MAN, Scania, Porsche, and Italdesign. As the largest automaker in Europe, the group aims to expand its operations in Iran through several of its companies. Volkswagen was one of the first automakers to start research and negotiations for entering Iran even before the nuclear agreement and eventually reached an agreement with the Mammut automotive group for importing and producing cars in Iran. Initially, the company negotiated with Iran Khodro, the largest automaker in Iran, but after initial talks, it sought negotiations with private Iranian companies. Negotiations with the Kerman automotive group, which was Volkswagen's last partner before leaving Iran, were part of this process. Volkswagen had collaborated for several years with the Bam automaker, a subsidiary of the Kerman automotive group, to produce the Volkswagen Gol, which was assembled in the new Argh economic zone and was a product of Volkswagen's Brazil branch. With the rise of Mahmoud Ahmadinejad's government, Volkswagen gradually cut ties with Bam automakers. Besides this Kerman company, Volkswagen had extensive negotiations with two influential families in the import and production of cars in Iran. Negotiations with the Gerami family, one of the main powers in the field of car imports in Iran, and the Fardous family, active in heavy vehicle production, took several months. The Fardous family owns one of the largest industrial companies in Iran, producing trucks and containers, and is the main partner of Scania in Iran. Scania is also a subsidiary of the Volkswagen Group, and due to the close relationship and knowledge that Volkswagen has of this influential family in Iran, cooperation with the Fardous family and the Mammut industrial group was finalized. In the winter of 2017, the 'Mammut Khodro' company was registered as the entity responsible for overseeing Volkswagen's presence in Iran. Mammut, a fully private company in Iran, began its operations in 1991 with products such as sandwich panels, prefabricated buildings, trailers, and containers on a 50-hectare site. With the registration of Mammut Khodro, the company is set to produce Volkswagen cars in Iran. Initially, Mammut Khodro will import two Volkswagen products, the Passat and Tiguan, and plans to produce cars in Iran later. Mehrzad Fardous, CEO of the Mammut industrial group, stated that the company aims to produce a car that serves all the people of Iran. However, this statement seems to be more of a slogan, as the cheapest Volkswagen model in Iran, if produced, would cost more than 40 million tomans, while 70% of the Iranian car market consists of vehicles priced below 40 million tomans. The 'Donyaye Khodro' newspaper has reported that the cheapest Volkswagen product in the Iranian market is the Volkswagen Polo. If produced in Iran, this car would have a price range between 50 to 70 million tomans, depending on various accessories (its price in the European market ranges from 11,000 to 16,000 euros). This vehicle will be offered in Iran with a 1600 cc engine, producing 105 horsepower. One of the biggest challenges Volkswagen faces in offering its products in Iran is the high cost of its products for production in Iran. The price of the cheapest Volkswagen models, around 10,000 euros, is still expensive for production in Iran. Among the automakers under the Volkswagen Group, Volkswagen and Scania have partnered with the Mammut industrial group, while SEAT has reached an agreement with Moin Motor, which was the representative of Porsche in Iran before sanctions, for imports. Moin Motor announced that gasoline vehicles from SEAT with engine sizes less than 2000 cc will enter the Iranian market. The price range of SEAT products in Iran has been stated to be between 80 to 250 million tomans. Another subsidiary of Volkswagen, Škoda, is currently negotiating with the Gerami family for the production and import of its products. This family is considered one of the main powers in car imports in Iran and holds over half of the Iranian imported car market through the import of Kia and Hyundai products. This influential family also intends to bring the luxury brand of the Volkswagen Group, Audi, to Iran. Jaguar and Land Rover are other brands that will soon be imported by this family to Iran. Among all the automakers under the Volkswagen Group, Scania's plans in Iran are currently the most serious. The Swedish company Scania, a subsidiary of the Volkswagen Group, has extensive plans for investment in truck and bus production in Iran. Henriksson, the CEO of Scania, stated: 'We intend to make Iran the center of our production in the Middle East.'