Russian automaker AvtoVAZ has pushed back its planned entry into the Iranian market to 2025, the company's chief executive Maxim Sokolov announced on November 19, marking a significant delay from the previously targeted 2024 launch, Kommersant newspaper reported.

Russia’s war has seen hundreds of foreign companies leave the country, but no sector has been harder hit than the automotive. AvtoVaz, maker of the Lada, has seen its production come to a virtual standstill as the company, formerly run by Renault until its exit following the invasion of Ukraine, set up a “spoke and wheel” model that means most of the more sophisticated parts were imported from Western Europe but now are making their way through back door markets including Central Asia.

Speaking at the "Transport of Russia" international forum, Sokolov confirmed the company had already delivered initial shipments to its Iranian partner for certification purposes several months ago, whilst also revealing plans for expansion into the United Arab Emirates.

"First deliveries to our local partner in Iran were made a few months ago for necessary vehicle certification," Sokolov said. He noted that the timeline for UAE market entry would depend on local market conditions and the adaptation of dealership centres to Lada standards.

The Russian carmaker intends to export its Lada Vesta, Lada Granta and Niva Travel models to Iran, according to Andrey Vladimirtsev, AvtoVAZ's head of foreign markets sales and business development. The vehicles were first showcased in Iran during the second Eurasia Expo in December 2023, with local company Nika Motors designated as the import partner.

This marks AvtoVAZ's second attempt to enter the Iranian market, following an unsuccessful effort a decade ago that was blocked by US sanctions. In April 2024, Sokolov had maintained that regional escalations in the Middle East would not affect the company's expansion plans, though he declined to disclose targeted sales volumes for the Iranian market.

The development comes against the backdrop of growing automotive trade between the two sanctioned nations. Iran, the largest automaker in the Middle East, began exporting vehicles to Russia following Western sanctions on Moscow, though these exports have faced criticism over quality concerns.

Iran's automotive sector is dominated by two major manufacturers, Iran Khodro (IKCO) and SAIPA, which together control 85% of Iran's domestic market. IKCO's previous attempt to establish a presence in Russia between 2007 and 2009 encountered significant challenges, including complaints about vehicles' performance in cold weather and concerns about parts quality.

SAIPA's recent plans to export 45,000 vehicles to Russia were cancelled after Russian distributor Best Motors LLC deemed them economically unviable, according to Russian media reports. The Iranian manufacturer's main competitor, IKCO, has since modernised its range, including the recent release of the Rira crossover model based on a 2017 Groupe PSA platform.

The delayed timeline for AvtoVAZ's market entry highlights the complexities of automotive trade between Russia and Iran, as both countries seek to strengthen economic ties whilst navigating international sanctions and technical challenges.