Blog: Dave LeggettPersian reflections

Dave Leggett | 7 July 2003

I'm back in Blighty now, but the visit to Tehran last week was certainly an eye opener on a number of levels. I'll share some thoughts here. Firstly, Tehran is a vibrant place. It is a teeming city of twelve million and the roads are pretty busy and chaotic, but it is a clean place with an infrastructure that works. Islamic Republic? Yes it is, but that aspect of society was not anywhere near as obvious as I thought it would be. The people were 'normal', well-dressed and going about their business just like the citizens of any major world city. I never felt intimidated and I met a number of expatriate Britons who are very happy living and working in Tehran. The Iranians I met were extremely hospitable people and interested to hear about life in Britain. Tehran did not have the atmosphere of a heavily oppressed place. Fellow British visitors from UK-based component suppliers on the SMMT-organised trade mission agreed with me.

In fact, the country is becoming more liberal in many respects and there is a hunger to modernise. Women are less covered up and more colourfully attired than they used to be and Iran is undeniably a democracy, if an imperfect one. I'm sure there's a case for the prosecution to be made in terms of the position of women in Iranian society, but they can at least drive cars and hold responsible positions - compare Iran to Saudi and Iran doesn't look so bad. Many people watch satellite TV and access the Internet - so they are increasingly exposed to international news and tastes (kids in Tehran like to wear Nike trainers too). The government does not seem to have a big hold on people in the way that is sometimes portrayed in Western media. The main issue seems to be managing change, reform and the tensions in society. A lot of young people want big changes now, but older generations want more gradual change. But no-one seems to doubt which way the momentum is going. Economically, the movement is towards liberalisation too - there are private banks now and Iran wants to modernise its economy, get loans from the World Bank and wants to join the WTO. And Iran is not a poor economy - there is real wealth generated from its energy and mining industries. There are rich people in Iran who can already afford the high car prices that Iranians have to pay. Word on the Tehran street is that Mercedes-Benz will be assembling the E-class in Iran soon and that there will be no shortage of customers.

Iran wants partners and naturally looks to Europe - with which Iran likes to be associated (Iranians are not, repeat not, Arabs by the way). The French and Germans have been making inroads, but the British are now getting in on the act. The British start with 'baggage' of course. There's imperial history and the military conflict in the country next door is not helpful (the British Embassy was temporarily evacuated in April after a suicide bomber drove a car bomb into the Embassy gates and grenades were thrown over the wall) but there's a widespread respect for the British (we gave them the Paykan after all!). There's a business opportunity in Iran for Europe that starts with a big headstart - no American competition. Also, Iranians don't seem too keen on the Japanese as technology partners. As far as the auto industry is concerned, PSA has a good position with Iran Khodro, but Volkswagen is aggressively pursuing opportunities and there was a big VW presence at the Tehran auto show. Volkswagen I am sure, will soon be making cars in Iran. Skoda too.

All in all, an interesting developing market that could become a significant regional production base. Iran has no shortage of well-educated engineers and I saw enough to conclude that they are well aware of what they need to do and where to invest (Iran Khodro, for example, has a state of the art CMM). Vehicle exports to neighbouring countries are already significant and Iran is well-positioned to supply the countries of southern Asia CIS as well as the Middle East. The Samand points the way. Developed by Iran Khodro, it can justifiably be viewed as an Iranian car and there are no IPR issues. The big question is this: how quickly will Iran's auto industry develop and restructure and who wants to be part of it, partnering Iranian firms and helping the Iranian auto industry to modernise, as it surely will?

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