Hyundai, Kia to enter Iranian car market in the second quarter

Hyundai Motor and Kia Motors will sign a complete knock down contract with Iranian automakers and export related components during the second quarter of this year, sources confirmed on Monday. Hyundai and Kia will become the second Korean conglomerate to resume business in the Middle Eastern country after POSCO following the lifting of international sanctions on Iran.

Complete Knock Down (CKD) contract is a method by which Hyundai and Kia export components to assemble into a final product in a local company's factory, which is then sold under the brand name of Hyundai and Kia. Developing countries prefer this approach as it helps job creation and technology development at the same time.

Before the international community imposed sanctions on the Middle Eastern country, Hyundai and Kia had sold cars with local firms RVMCO and SAIPA, respectively through the complete knock down method. Hyundai sold 23,200 units in 2010 and 14,500 in 2011, while Kia sold 26,000 in 2010 and 22,000 in 2011. Since automobiles and parts exports suspended in 2012, dealers of neighboring countries have reexported cars imported from Korea, enabling Hyundai and Kia maintain market share. Hyundai and Kia resumed exports in July last year when nuclear talks reached settlement.

Currently, Hyundai Motor is gauging resuming production with several local firms. The Iranian automotive market is dominated by Khodro and SAIPA, and Hyundai is likely to sign contract with one of these two firms, according to local sources. Kia Motors is pushing ahead with renewing contract with SAIPA.

강유현기자 yhkang@donga.com