Daimler Trucks is setting the course for a return to the Iranian market, having signed letters of intent with its local cooperation partners.
The truck maker said it plans to “quickly resume” its business in the market, after the agreements with Iran Khodro Diesel (IKD) and the Mammut Group.
The move follows the lifting of many Western sanctions on Iran, after it was confirmed on Saturday that Iran was carrying out the measures agreed under last summer’s historic nuclear deal.
Germany’s Daimler AG already had business relations going back five decades with IKD – the largest vehicle manufacturer in the MENA region, with over 50% market share in Iran.
The areas of cooperation include a joint venture for local production of Mercedes-Benz trucks and powertrain components plus the establishment of a sales company for Mercedes-Benz trucks and components, Daimler Trucks said in a statement.
Furthermore, there are plans for Daimler to return as a shareholder in the former engine joint venture Iranian Diesel Engine Manufacturing Co. (IDEM). Both partners are also looking at establishing a joint venture for the local sales of Mercedes-Benz commercial vehicles.
Apart from the plans for the sale of Mercedes-Benz trucks, Daimler Trucks also sees opportunities for the Fuso brand, particularly in the light-duty truck segment. Accordingly, it has signed a dealership agreement with Mayan, part of the Dubai-based Mammut Group, one of the Middle East’s largest truck bodybuilders and distributors.
“Daimler commercial vehicles have always had an excellent reputation in Iran. And right now, there is a huge demand for commercial vehicles, especially trucks,” said Dr. Wolfgang Bernhard, member of the Daimler board of management, responsible for Daimler Trucks & Buses.
“We plan to quickly resume our business activities in the market there. The signing of the letters of intent with our local partners IKD and Mammut Group are important pre-requisites to resume business quickly.”
Iran offers promising opportunities for the world’s largest truck manufacturer, with its growth potential following many years of sanctions and the pent-up demand in the transport sector.
With a GDP of $415 billion in 2014, Iran was one of the largest national economies in the Middle East, despite the sanctions levied on it. The country’s Ministry of Industry, Mine and Trade estimates that about 200,000 commercial vehicles will be replaced in the coming years – some 56,000 of them in the next three to five years alone.
By signing the letter of intent, Daimler Trucks has kicked off the process for a comprehensive re-entry into the Iranian market. The manufacturer is looking at supplying the first Mercedes-Benz Actros and Axor trucks to the country in the form of CKD (completely knocked down) kits before the end of the year. The company also intends to open a representative office in Tehran during the first quarter of 2016.
Daimler has been present in the Iranian market with Mercedes-Benz trucks and passenger cars since 1953, interrupted only by the sanctions phase between 2010 and 2016. Mercedes-Benz commercial vehicles are still very visible on Iran’s roads. Previously, Daimler sold up to 10,000 vehicles per year in the Islamic Republic, most of them commercial vehicles.