Lifting of Sanctions Boosts Partnership Opportunities for Foreign Companies in the Iranian Commercial Vehicles Market – Finds Frost & Sullivan

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Mumbai, Maharashtra, India
Iran is poised to become a major trade and logistics hub as the Government is mooting various projects to improve port and road infrastructure through partnerships with various nations. The lifting of sanctions has breathed life into the commercial vehicle (CV) market, with French and German original equipment manufacturers (OEMs) already in talks with local CV manufacturers to begin the process of market re-entry.

New analysis from Frost & Sullivan, Strategic Overview of the Commercial Vehicle Market in Iran (http://www.frost.com/sublib/display-report.do?id=P8CA-01-00-00-00&src=PR), finds that the commercial vehicle market is expected to grow to 320,148 units in 2022 from 160,107 units in 2015, at a compound annual growth rate of 10.4 percent. The bus segment is likely to grow the fastest, at a CAGR of 34.9 percent. Furthermore, production capacity utilisation in the medium and heavy-duty truck segment is anticipated to increase from 10 percent to 15 percent in 2015 to 60 percent to 65 percent by 2022.

For complimentary access to more information on this research, please visit: http://corpcom.frost.com/forms/MENASA_PR_Ravinder_P8CA

The market had been stagnant, as both external and internal factors had crippled economic growth and trade. Besides, vehicle buyers have been deferring purchases until Western OEMs return to the market. However, the market is highly regulated and foreign companies can enter the market only through joint ventures with domestic participants.

“The dominance of local participants and high import duty on completely built units encourage local production and assembling, thereby reducing reliance on imports,” said Frost & Sullivan Intelligent Mobility Research Analyst Marshall Martin. “Iran has regional access to 15 countries and strategically placed Free Trade Zones for exporting, making it an extremely attractive investment destination for CVs.”

While the vehicles have marginally bigger and more powerful engines, they need superior comfort and safety features. Foreign OEMs will look to make the most of this market requirement by establishing common platforms between different regions and save costs and time in developing region-specific products.

The Iranian market is currently beset by a shortage in cargo and construction projects, leading to reduced demand for trucks. This market situation affects fleet owners’ and drivers’ ability to pay their instalments. Some small companies even resort to smuggling vehicles into the country, making the market uncompetitive.

“In due course, the entry of Chinese and Russian OEMs will compel Western OEMs to reduce prices to regain market share,” noted Martin. “Convergence by both budget and premium manufacturers towards a common price range of $55,000 to $75,000 will enhance the competitiveness of the market.”

Overall, with its huge untapped potential, Iran will continue to be the leading market for CVs in the Middle East. The market will be even more competitive by 2022, driven by the rising demand for quality and reliability.

Strategic Overview of the Commercial Vehicle Market in Iran is part of the Automotive & Transportation (http://ww2.frost.com/research/industry/automotive-transportation) Growth Partnership Service program. Frost & Sullivan’s related studies include: Global Connected Truck Market 2016 Outlook, 2016 Outlook of the Global Medium-Heavy Duty Truck Industry, Impact of Euro VII on European Heavy-Duty Truck Market, Strategic Corporate Profile of CNHTC Portfolio and Connected Truck Market in Japan. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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