Western carmakers to face Chinese competitors in Iran if sanctions lift

Paris

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 assembled in Iran for Chinese carmaker Anhui Jianghuai Automobile Co. Mr Kolahi paid 570 million rials (S$27,300) for an automatic-transmission version about a month ago - or about 30 per cent less than other comparable new cars he considered.

"It's a beautiful design, and relative to its price and what else is on the market, it's very good," Mr Kolahi said. "I see so many of these JACs now on the streets."

As Western carmakers prepare to re-enter the Middle East's highest-volume car market, they'll 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 one per cent in 2011 to about…