Daimler AG (DDAIF - Free Report) announced that it intends to re-enter the Iranian market. The world’s largest truck producer is considering this return in order to meet the huge demand for commercial vehicles, mainly trucks, in Iran. It is expected that 200,000 commercial vehicles will be replaced in the coming years, with 56,000 commercial vehicles requiring replacement over the next 3–5 years; further boosting demand.
Daimler has signed letters of intent with local cooperation partners, Iran Khodro Diesel (“IKD”) and the Mammut Group to re-enter the Iranian market. Daimler and IKD have good business relations for the last 50 years. IKD is a subsidiary of Iran Khodro Industrial Group, which is the largest vehicle manufacturer in the MENA region, with around 50% market share in Iran.
Per the new letters of intent, IKD will cooperate with Daimler and form a joint venture under which Mercedes-Benz trucks and powertrain components will be produced locally. In addition, it will establish a sales company for Mercedes-Benz trucks and components. Daimler also intends to return as a shareholder in the former engine joint venture Iranian Diesel Engine Manufacturing Co. Further, both partners are considering the formation of a joint venture focused on selling Mercedes-Benz commercial vehicles locally. Both the companies are expected to benefit from this collaboration.
Additionally, Daimler has signed a distribution agreement for the FUSO brand with Mayan which is part of the Mammut Group. The automaker foresees huge opportunities for Mitsubishi FUSO, mainly in the light-duty-truck segment.
Daimler entered the Iranian market in 1953 with Mercedes-Benz trucks and passenger cars. Earlier, Daimler’s sales volume was 10,000 vehicles per year, mostly commercial vehicles. However, its business was stopped from 2010 through 2016.
Daimler currently carries a Zacks Rank #4 (Sell). Better-ranked automobile stocks include Honda Motor Co., Ltd. (HMC - Free Report) , Nissan Motor Co. Ltd. (NSANY - Free Report) and Volkswagen AG , all sporting a Zacks Rank #1 (Strong Buy).
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