Emerging Market

Germans Late to the Party in Iran

iran_ozan demicran for handelsblatt
Tehran auto assembly plant.
  • Why it matters

    Why it matters

    With sanctions set to be lifted, Iran offers huge potential for international firms.

  • Facts


    • The historic agreement reached in July between Iran and six world powers offers the prospect of ending crippling economic sanctions against Iran.
    • Iran has the world’s fourth-largest oil reserves and huge pent-up demand for Western products and investment to modernize its outdated infrastructure and industry.
    • Iranian business leaders want to cooperate with German firms because they value German knowhow and technology — but so far, German firms are taking a wait-and-see approach in Iran, letting rivals take the lead.
  • Audio


  • Pdf

It’s pleasantly cool in the assembly hall compared with the searing heat in the car park of the Tehran auto assembly plant. Rays of sunlight pierce the corrugated roof and hit the network of metal tracks that make this 60-meter-long factory floor resemble an old gold mine. The smell of car paint hangs in the air. A workman is fitting an engine hood on a silver car chassis. In the background, sparks fly behind a wall of sea-through plastic strips.

Hamidreza Davoodzadeh, the manager of the plant, looks pleased as he walks among the workers and their machines. The plant belongs to the Bahman group and produces 22,000 cars and delivery trucks per year. “But it could easily be 70,000,” Mr. Davoodzadeh said. The company assembles cars under license on behalf of various manufacturers including Japan’s Mazda and Isuzu.

His message is clear: There’s no shortage of capacity — all that’s missing is an export market.

Iran’s economy is on the brink of a major transition following its nuclear agreement with six world powers in July which is set to end decades of sanctions. The country’s economy is crying out for new investment in its aging factories and infrastructure, and for deals with the West. The end of the sanctions will open up a market of 80 million people, many of them highly educated and hungry for quality products. Iran’s ranks 18th in the world in terms of purchasing power, just behind Spain and Turkey, and has the world’s fourth-largest oil reserves.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.