Iran signs $300 million MoU for exports of cars to Russia

A $300 million memorandum of understanding has been signed for the export of Iranian cars to Russia, the president of the Association of Homogeneous Powertrain Industries and Parts Manufacturers says.

So far, 1,000 Iran-made cars have been exported to Venezuela, with more shipments planned in the future given the popularity of automobiles built in Iran, Mohammadreza Najafi-Manesh said on Monday.

“Russia and Venezuela are two good markets for Iranian car exports, and if the export conditions are met, we can find a suitable position in terms of car exports,” he said.

Najafi-Manesh touched on Iran’s exports of cars to Armenia and Azerbaijan before, saying they show domestically produced cars are of good quality, but for the development of exports, efforts should be made to improve it further.

Iran Khodro, the Middle East’s leading automaker, is eyeing Russia’s large market which the Europeans have abandoned amid the raging Ukraine conflict, an official said in August.

The company’s first exports to Russia occurred notably between 2007 and 2009. Some Iran-made automotive components such as engine cooling systems, suspension and casting parts have been exported to the Russian market in recent years.  

The Ukraine war has upended car production in Russia which is the eighth-largest automotive market in the world. Several global manufacturers have halted deliveries to Russia, while others have been forced to pause production due to a lack of parts.

In May, Iran’s official news agency IRNA said a leading Russian automotive company had sounded out Iranian parts and equipment manufacturers on the possibility of supplying its production lines with required products.

Master cylinder brake boosters, hydraulic anti-lock braking systems, ABS sensors, seat belts, airbags, alternators, air conditioners, oxygen sensors, thermostats and window lift systems are among the parts demanded by the Russian automaker, a member of the Iranian Auto Parts Manufacturers Association (IAMPA)’s presiding board Hossein Bahrainian said then.

Iran's auto sector has started standing on its own feet after years of reliance on imported car kits which foreign companies stopped supplying when the US reimposed sanctions on the Islamic Republic in 2018.

Iranian automakers picked up the slack after France’s Peugeot and Renault exited Iran along with other international companies in the wake of US sanctions which created a supply crunch which saw car prices vault to unprecedented highs.

The crisis forced Iran Khodro, Saipa and other companies to pool up local resources to produce Iranian-made vehicles, with the defense ministry joining in to manufacture some of the hi-tech parts which Iran used to import.

Earlier this month, Venezuelan Minister of Transport Ramón Velásquez announced the shipment of 1,000 cars built in Iran to Venezuela, stating that they were among 80,000 requests registered for the products of an Iranian car manufacturer in his country.

“We have a very high demand for Iranian car products, where we were able to register about 80,000 requests in the first stage,” he said.

Iran-Venezuela relationship develops beyond energy

Iran is planning to ship another 2,000 cars to Venezuela, an Iranian trade official says, in a further sign of a burgeoning relationship that appears to be developing beyond energy.

With the exports, Iran is staking out a niche in South America’s automotive marketplace which has a lot of space for growth and expansion, given the uneasy relationship of some of the countries of the region with the United States.

It follows the Iran-Venezuela 2022 Expo Fair held on Sept. 14-18 in Caracas where President Maduro announced the assembly of four Iranian models at Venirauto car manufacturing plant, a joint venture between the Venezuelan government and Iran Khodro.

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