Daimler is re-entering the Iranian market, announcing plans for a joint venture to build Mercedes-Benz trucks after trade restrictions tied to Iran’s nuclear program were lifted last weekend, according to The Free Lance-Star in Fredericksburg, Virginia.
The paper reported that Daimler has signed letters of intent with Iran Khodro Co. for production of trucks and power-trains, and with Dubai-based Mammut Group for distribution of Fuso-brand vehicles. Daimler said it has done business with Iran Khodro for 50 years.
“Right now, there is a huge demand for commercial vehicles, especially trucks,” Wolfgang Bernhard, the head of Daimler’s commercial-vehicle unit, said in the statement. “We will quickly resume our business activities in the market.”
More declarations of investment are likely in coming weeks as companies seek to profit from rapprochement with a country that has the world’s largest natural gas reserves, a young, well-educated population of almost 80 million people and a $406 billion economy served by a relatively developed road and rail network. Yet for all the optimism, Iran’s re-admittance into the world economy may be a slower journey.
“I would expect European companies to be faster to engage with Iran than their U.S. peers,” Daniel Salter, an equity strategist in London at Renaissance Capital, said in an email. “But they will also be cognizant of the risks of sanctions snapping back, so I would expect a gradual process of re- engaging.”
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