Chinese carmakers taste success in Iran

When Mohammad Kolahi wanted to replace his French Peugeot sedan this year, the Teheran business consultant looked East instead of West.

A friend was already driving a JAC J5, an Italian-designed four-door vehicle assembled in Iran for Chinese carmaker Anhui Jianghuai Automobile Co. Kolahi paid 570 million rials ($20,300) for an automatic-transmission version about a month ago - or about 30 percent less than other comparable new cars he considered.

"It is a beautiful design, and relative to its price and what else is on the market, it is very good," Kolahi said.

As Western automakers prepare to re-enter the Middle East's highest-volume car market, they will find a landscape changed by new competitors from China.

Led by Chery Automobiles Co, Lifan Industry Group Co and Jianghuai, the Chinese have benefited from the vacuum left by the likes of PSA Peugeot Citroen, which once counted Iran as its biggest market outside France.

The Chinese will probably boost their share of the Iranian market from about 1 percent in 2011 to about 9 percent of 1.17 million units in 2016, according to researcher IHS Automotive.

Chery, Lifan and Jianghuai all have local partners that build cars in Iran from kits shipped from China.

Chinese companies' share of this segment also more than quadrupled to 8 percent between 2011 and last year, IHS said.

The Europeans face growing competition from the Chinese. Cars like the MVM 110, a made-in-Iran version of Chery's QQ hatchback, are a common sight in Teheran's traffic alongside the ubiquitous Kia Motors Corp Pride and Peugeot's 206 and 306.