Daimler and IKCO have inked a memorandum of cooperation to produce three diesel truck engines in Iran, following the recent lifting of sanctions.
Iran has been in almost complete economic isolation for decades as the West voiced its concern surrounding what it believed to be Tehran’s enrichment of uranium for possible use in nuclear weapons, but the deal concluded just weeks ago, now paves the way for business to restart in normal conditions.
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The cooperation memorandum will see Daimler work with Iranian Diesel Engine Manufacturing (IDEM) and Iran Khodro Diesel (IKD), to produce the powertrains in Tabriz.
The engines to be manufactured in Tabriz will be 400 series diesel and also CNG 900 variants, meeting, says IKCO, Euro IV and V standards for heavy and semi-heavy trucks, as well as the CNG 900 series, built to Euro 6 standards.
Daimler will own 30% of IDEM shares.
IDEM is a diesel engine manufacturer in an industrial zone in North West Iran. The company first started production in 1972 with a joint investment – IKCO – 70% and Daimler – 30%.
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By GlobalDataThe company manufactures more than 12,000 diesel engines per year.
IKD is a subsidiary of Iran Khodro Industrial Group, the largest vehicle manufacturer in the MENA region having more than 50% market share in Iran.
“Daimler commercial vehicles have always had an excellent reputation in Iran,” said board member, Wolfgang Bernhard last week. “And right now, there is a huge demand for commercial vehicles, especially trucks.
“We plan to quickly resume our business activities in the market there. The signing of the letters of intent with our local partners IKD and Mammut Group are important pre-requisites to resume business quickly.”
Daimler says Iran has significant growth potential following many years of sanctions and pent-up demand in the transport sector.
Iran’s Ministry of Industry, Mine and Trade estimates around 200,000 commercial vehicles will be replaced in the coming years, some 56,000 of them in the next three to five years.
