Iran's Car Market Is Opening Up

There are 20 BMW dealerships and parts outlets in Iran, which until recently didn't have much foreign currency for imported cars. . (Photo: Persia Khodro)

Visit the slick website of Persia Khodro, which sells BMWs in Iran, and you’ll learn that the full range of cars is available but there are 20 showrooms and parts suppliers in the country. And women can buy, too. This isn’t Saudi Arabia. Despite the Islamic Republic, they can drive in Iran, and discreet saleswomen in head scarves are ready to assist.

Ayatollah Khamenei
Ayatollah Ali Khamenei exits a BMW.

Ayatollah Ali Khamenei exits a BMW.

“[Persia Khodro] tries to increase the number of its retailers across Iran and offer services which are unique to Iran,” a new press release says. “The company seeks to meet the demands of BMW owners promptly and maintain its standards at the highest international level.” Last year, there was a big party at headquarters celebrating 40 years of the 3-Series, complete with a parade of classic cars from Teheran to the northern tourist town of Kelardasht.

With economic sanctions on Iran in place, luxury car buyers had trouble raising the necessary foreign currency and imported Porsche, BMW and Mercedes cars piled up at dealerships . Kia and Hyundai were the bestselling imports in the first six months of 2015.

traffic in teheran
Traffic is heavy in Teheran, and most cars are small and inexpensive domestic sedans. (Photo: Cynthia Chen/flickr)

According to the International Business Times, reporting last July, “With U.S. automakers still barred from doing business in Iran, the Iranian market for foreign marques is left largely to the Europeans, including Renault, which along with Peugeot had been sending partially assembled cars to Iran to sell in the local market until the most recent sanctions were put in place in 2011.” That was then. “Just hours after the nuclear deal was announced, Paris-based PSA Peugeot outlined plans for new Iranian production.”

But now the floodgates are open, and the affluent classes are buying luxury again. The biggest sellers now are cars that sell for $8,000 to $10,000, like China-sourced, made-in-Iran Cherys and Lifans. Slightly more upscale are the Iran Khodro and Saipa sedans. But the market is set for big gains in both imports and domestics. Analysts say the current 1.4 million annual sales (for 2015) could zoom to four million by 2020.

Iran's homely Paykan, assembled locally, has its roots in a British design. (Photo: Quigibo/flickr)

Automakers want in. Audi said in January it is considering its first foray into the Iranian market. Mercedes — long the model of choice for the country’s wealthy — has already signed letters of intent to jump in with trucks.

wrecked Porsche
The remains of a Porsche belonging to an Ayatollah's privileged grandson.

The remains of a Porsche belonging to an Ayatollah's privileged grandson.

Khamenei himself has been seen riding around in a BMW, which is certainly a vote of confidence in the brand. The Iranian clergy have taste in cars, and so do their offspring.

Parivash Akbarzadeh
Parivash Akbarzadeh, one of Iran's bright young things, who was driving the Porsche.

Parivash Akbarzadeh, one of Iran's bright young things, who was driving the Porsche.

Making headlines recently in Teheran was a fatal crash in a brand-new Porsche Boxster S. The car belonged to Mohammad Hossein Rabbani-Shirazi, who was letting his glamorous 20-year-old girlfriend drive. Both were killed, but the real scandal was the fact that Rabbani-Shirazi’s grandfather was Ayatollah Abdolrahim Rabbani-Shirazi, an aide to Ayatollah Khomeini during the 1979 revolution and a high-ranking official afterward. Ayatollah Rabbani-Shirazi also died in a car crash — in 1982.

Editor's note: An earlier version of this story contained incorrect information about the ownership of Persia Khodro.