Posted May. 18, 2016 07:22,
Updated May. 18, 2016 07:39
Hyundai Motor is likely to resume knockdown exports to Iran, following the footsteps of Kia.
It has been confirmed that the auto maker is undergoing legal review of a deal to export auto parts to SDM, an Iranian transportation & construction company for knockdown manufacturing of its mid-sized truck “Mighty.” The company plans to reach an agreement by next month at the earliest, if the results turn out positive. Concrete numbers are yet to be fixed, but annual number of the deal is expected to reach between 2,000 and 3,000, given the size of the local market.
A "knockdown export" is about Hyundai exporting parts to an Iranian maker so that it can produce finished vehicles and sell them in the market. Hyundai will transfer its assembly techniques during the process.
Hyundai has already agreed with SDM immediately after the removal of sanctions imposed on Iran that it will supply parts for the model upon SDM’s request. “SDM will be able to launch Mighty as its first automobile,” said an SDM official.
Before the Iranian sanctions, the commercial vehicles department of Hyundai had carried out knockdown trades with Iran Khodro Diesel, an affiliate of the country’s biggest car maker Iran Khodro Company, for Mighty and Chorus, a small-sized bus model. Hyundai is still in search for a local partner to conduct a knockdown for sedans. RVM, another affiliate of Iran Khodro, used to be the partner before the sanctions, manufacturing Verna, and Avante models.
Meanwhile, Kia Motors resumed its knockdown business with Saipa, Iran’s No.2 car maker, earlier this year. 1,200 Fortes (local brand: Serato) were locally produced during the first quarter. Kia has also sold 800 finished cars to the market, including some of the K3 model. The brand’s representative sedan Pride had once been one of the most commonly seen cars on Iran’s roads along with Peugeot, before the sanctions.
Hyundai and Kia have together exported 22,000 finished vehicles in addition to 27,000 knockdowns in 2010, but had to pull out of the market since 2012. Korea's two biggest automakers resumed business with Iran last year, exporting a total of more than 10,000 automobiles. Hyundai has recorded no exports so far this year.
Iran’s automobile market is expected to grow exponentially. The number of cars produced domestically last year is estimated at 1.4 million. The government has announced a plan to increase the number to 3 million by 2025, considering the industry taking up 10 percent of GDP.
“The Iranian government plans to nurture its auto industry by attracting investment and technical transfer,” said Kim Wook-jin of Tehran Korea Business Center. "Discussions on local knockdowns will be fueled in the future.”