According to this report, Volvo is to supply its African customers solely with vehicles manufactured by Saipa Diesel in Iran.
Volvo's response urges a bit of caution. It told us that this deal is centred around a supply deal to an oil company in the Ethiopia and Somalia. Volvo already has a manufacturing plant in South Africa.
Granted, the African market isn’t huge at the moment, but it’s certainly growing, and South Africa is now attracting interest from, amongst others, Tata, Ashok Leyland and FAW, along with both European and US-based OEMs.
But the relationship between Volvo and Saipa appears to be growing closer, and we have to wonder what will happen if the NYSE-listed Swedish OEM gets caught up in any sanctions that the Bush administration is trying to get imposed upon the Ahmadinejad regime in Tehran.
An alternative view is thus. Iran is fast becoming a key centre for automotive production. It has ongoing deals with both Chinese and Russian truck builders – along with Volvo, Mercedes-Benz, Iveco and MAN.
Is Volvo consolidating it relationship on the basis of analysis that suggests that Iranian automotive sector will develop from it current national focus to a more regional / global focus? If the business model being pursued by Iran Khodro Diesel’s parent IKCO is to be followed by the Iranian truck industry, then that would seem to be the gameplan.
IKCO has so far established five factories in Syria, Senegal, Venezuela, Belarus and China for production of Samand, Pars and Peugeot 206 models. Recently, Iran and the Ukraine signed a MoU on economic and commercial cooperation that looks likely to include an automotive element. Whilst all of this is going on, China's Chery is looking to establish a plant in Iran. Chery has been looking hard at export markets, and was the first Chinese OEM to exhibit at the Detroit Motor Show earlier on this year. It has also just signed a deal with Fiat for petrol engine supply.
It seems rather odd that a country standing at the edge of US opinion should be courted so hard by much of the rest of the world. Iran has oil, a young, well-educated workforce and modern production facilities. It also has a point to make. It seems entirely probable that Tehran will seek to capitalize upon these assets.