Before the Islamic Revolution in 1979, Iran was a flourishing marketplace for U.S.-manufactured cars and trucks, but a combination of U.S. sanctions barring most trade and Iran’s own restrictions have blocked sales.
Now, since last year, hundreds of the most sought-after American and European car models have appeared in cities like Tabriz from a nearby free trade zone close to Armenia and Azerbaijan, an example of how sanctions rarely stop the flow of luxury goods.
This is also a clear sign, if one were needed, of the enormous potential market Iran offers to U.S. auto giants if an initial agreement between the Islamic Republic and world powers leads to a permanent settlement of their dispute over Tehran’s nuclear program and the lifting of trade embargoes.
The Aras free zone established eight years ago in the northwest of the country began allowing car imports last year, putting it in prime position as a key conduit for trade if the diplomatic thaw between Iran and the West continues.
While the Islamic Republic bars imports of autos from the United States – which severed ties in 1980 after its diplomats were taken hostage – Aras benefits from exemptions allowing imports of vehicles from third countries with little or no tax.
Under the terms of the free zone, only those connected to it – residents or registered businesses – can buy the vehicles. Their owners can drive them inside the zone itself but also to Tabriz, the provincial capital of Eastern Azerbaijan.
Owners can also get a temporary licence plate to drive free zone cars in the rest of Iran for two months a year, arguably a great branding opportunity in a country which has few remaining classic Chevrolets and Fords from the pre-revolutionary era, when U.S. cars and trucks were a common sight.