March 17, 2023
SAIPA, Iran’s second largest automaker, has signed a deal to export up to 45,000 cars to Russia in the next Persian year; if they can be sold, it will be by far the largest export market ever achieved for Iranian vehicles.
Iran has sold a few thousand cars at various times in small countries like Senegal and Azerbaijan, but never anything approaching 45,000 in one year. Tejarat Online reported the deal on February 22.
Iran has been repeating for months that it wants to dominate the lower end of the Russian car market that opened up with the exodus of European and Japanese brands in the wake of the Ukraine invasion. However, SAIPA faces stiff competition from low-cost Chinese imports and local carmaker AvtoVaz, the producer of Lada vehicles, both of which offer cars at the same cheap price. Built on the backs of localized foreign platforms, Iranian cars are often criticized as ill-designed for Russian winter conditions.
Some Iranian news reports said the deal was worth $450 million while others said 450 million euros. That would mean a wholesale price of for each car averaging $10,000 or 10,000 euros ($10,600).
The deal to export the models was signed with Russia’s BM Group, renowned for its production of Russian military equipment.
Mohammad Ali Temouri, CEO of SAIPA, said: “Our partners in Russia are two major car manufacturers of the country that have closed due to sanctions, and SAIPA Group is ready to send its engineering and technical team to Russia to update their production lines and make things possible. We’ll provide car production and supply in the Russian market.” That made it sound like SAIPA would send kits to Russia and the Russians would assemble the cars.
SAIPA’s main competitor in Iran, number one automaker Iran Khodro (IKCO), exported some of its vehicles to the Russian market between 2007 and 2009. Some buyers of IKCO models complained that Iranian cars could not handle cold Russian winters. There were also objections to poor quality parts.
IKCO sold cars in Russia that were based on old Peu-geots-for example, the Samand model, which is essentially a Peugeot 405 from the 1980s.
By 2010, the Samand was seen in Russia as outdated. The country was busy developing the production of Western, Korean and Japanese brands that offered more interesting models.
