FRANKFURT (Reuters) -- Volkswagen and its sibling brand Skoda are looking at entering Iran following the country's deal with the West to end sanctions. The move could reduce their dependence on volatile Chinese and Brazilian markets and will also challenge French rivals.
Investment from Europe and elsewhere could start pouring into the country as soon as next spring after July's international deal to lift sanctions in exchange for a curbing of Tehran's nuclear ambitions.
"It is still too early to say which product we could use to go in with but of course we see the potential," VW brand r&d chief Heinz-Jakob Neusser told Reuters on Wednesday at the Frankfurt auto show.
"Iran is a very interesting market with great opportunities," Neusser said, adding VW would conclude an assessment of the country's auto market by the end of the year.
VW said in July that it was in talks concerning a possible move into Iran.
Czech division Skoda is similarly looking at the prospects for entering Iran, but has not taken a decision, its r&d chief Frank Welsch said in an interview. "If the conditions develop right, this will be a market where we can fit in quite well with our offerings," Welsch said.
Iran is already the Middle East's largest car market and analysts believe it could grow rapidly, with a population of almost 80 million and 1.1 million cars sold last year.
Volkswagen, hit by a drop in demand in China and Brazil which together account for almost 40 percent of its global sales, is keen to tap new markets.
But VW and Skoda may face stiff competition from past market leader PSA/Peugeot-Citroen and French rival Renault, which are also positioning themselves in the race to capture market share in Iran.
Renault has said it aims to use cash reserves still held in Iran to get a head start in the developing market.