Daimler vows to take China off Iran roads Investment
Daimler says its trucks division will start the deliveries of Mitsubishi Fuso brand in Iran later this year.
The German carmaker and Iran’s Mammut Group signed a distribution agreement for Fuso trucks, especially in the light-duty segment, back in January as the West lifted its sanctions on the Islamic Republic.
To redeem the lost ground in the reopened Iranian market, Daimler has to fight now-entrenched Chinese rivals, with trucks division head Wolfgang Bernhard saying the company will not cede business to the Chinese.
Two days after the lifting of economic sanctions against Iran in January, Daimler had signed letters of intent for the establishment of joint ventures in the Middle Eastern country.
Bernhard said Daimler’s market launch in Iran will initially begin with complete deliveries under the agreement signed between the two sides.
"We want to gradually switch to locally produced parts of motors, transmissions and axles up to complete lorries," he told Germany’s monthly business Manager Magazin.
However, the financial strength of Iran is not yet sufficient to quickly stimulate the economy and so to foment demand for trucks. However, in the long term Iran could be a similarly large market such as Turkey where Daimler sold 20,400 trucks last year, Bernhard said.
Fuso, once a Mitsubishi brand, is majority owned by Daimler since 2011.
In Iran, Daimler has a long history. The carmaker, interrupted only by the sanctions from 2010 to 2016, has been present in the market with Mercedes-Benz trucks and passenger cars since 1953.
Before the sanctions, Daimler sold up to 10,000 vehicles in Iran annually by its own account. Daimler estimates that Iran needs to replace 56,000 commercial vehicles over the next three to five years.
The carmaker’s re-entry plans for Iran also include establishing a joint venture with Iran Khodro Diesel for local production of Mercedes-Benz trucks and powertrain components, plus the establishment of a sales company for Mercedes-Benz trucks.
Daimler also plans to return as a shareholder in the former engine joint venture Iranian Diesel Engine Manufacturing Co. (IDEM).
The company has said the first Mercedes-Benz Actros and Axor trucks could be supplied to the country in the form of CKD (completely knocked down) kits or fully disassembled before the end of the year.
Officials of Mercedes-Benz passenger cars have also said the luxury automaker was preparing to re-enter Iran's market but they could be facing major challenges given the country’s austerity plans as part of its “economy of resistance.”
European carmakers view Iran as a major market with a pent-up demand as they face serious slowdown and layoffs in more established markets.
They are also faced with aggressive Chinese manufacturers making inroads in Asia and Africa where Daimler and others are pushing for growth and struggling to keep sales and profit steady.
“The difficult market conditions we’ve seen last year have become more difficult,” Bernhard was quoted as saying in February.