The German automaker said Tuesday it’s starting to export cars to the country and will begin selling its Tiguan and Passat models in August.
Iran was cut off from the world economy for years due to strict trade sanctions. But a historic 2015 deal curb Iran’s nulear program led the United States, Germany and other nations to ease those restrictions last year.
“By returning to Iran, the Volkswagen brand is filling in another blank spot on the global automotive map,” said Anders Sundt Jensen, Volkwagen’s Iran project manager, in a statement.
Volkswagen is betting there will be pent-up demand for German vehicles. It says the Iranian government estimates annual demand for new cars will hit three million in the long run, making it a bigger market than the United Kingdom.
Iran’s population — at 80 million — is almost as big as Germany’s.
A survey conducted after the historic Iran nuclear deal was reached found that about 50% of Iranian respondents were hoping to purchase foreign cars or motorbikes. Most believed imported goods offered better quality, and Germany was considered the best source of imports.
Volkswagen isn’t the only European firm doing new business in Iran.
French oil firm Total signed a multi-billion dollar deal on Monday to develop the country’s giant South Pars gas field. Total had been forced to abandon the gas field years ago due to sanctions.
The Total deal marked Iran’s first major Western investment since sanctions were eased.
Volkswagen is working with local automotive firm Mammut Khodro to sell its cars in Iran.